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Prudentia: Estonian government's intention to create new airline is foolish

BC, Riga, 21.09.2015.Print version
The Estonian government intention to create a new airline is foolish, the CEO of the financial consultancy firm Prudentia Karlis Krastins told LETA.

He said that in such a small and satiated market as the Baltic region, the announcement of a new airline brings memories of the creation of Air Lituanica on the ashes of flyLAL – Lithuanian Airlines, which hoped to compete against Latvian airline airBaltic but ultimately went bankrupt. Krastins says that he understands the Estonian government's desires, but does not understand why they are acting this way when there are obviously already too many airlines in Europe.


As the expert points out, airlines in Europe continue to consolidate with one another.


Krastins also reminded that Latvia has turned to its Estonian partners with an invitation to become an investor in airBaltic. ''We are not trying to put a hurdle in their way, but cooperate,'' he said. The attitude towards the Estonian side was one of openness, however, the Estonians were either stubborn, too proud or did not trust the Latvian side.


''Meanwhile, airBaltic has started active work at Tallinn Airport and will continue to do so. If Estonia wishes to create a new airline, it will be met with stiff competition,'' he said.


As reported, the Estonian government wishes to create a new airline which would takeover from Estonian Air in case the European Commission takes a negative decision in regard to state financing pumped into the airline, the Postimees newspaper reports.


Should the European Commission decide that aid granted to Estonian Air by the state is not in accordance with the rules, the Estonian national airline has to end operating, because the company is unable to repay the state aid.


In 2013, Estonian Air posted EUR 49.2 million in losses.

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