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International Internet Magazine. Baltic States news & analytics Monday, 26.10.2020, 11:40

Estonia approves Nordica's EUR 22 mln share capital increase

BC, Tallinn, 16.10.2020.Print version
The Estonian government at an online session on Thursday evening (October 15th) approved the decision to increase the share capital of state-owned airline Nordica by 22 million euros, informs LETA/BNS.

The company will also receive a loan of eight million euros from the Kredex foundation with Dec. 31, 2026 as the deadline, government spokespeople said. 

Minister of Economic Affairs and Infrastructure Taavi Aas received authorization from the government to vote in favor of the increase in the share capital of the Nordic Aviation Group as the minister responsible for the area of activity.

The purpose of the share capital increase and loan is to ensure the company's sustainability, smooth economic activity and the necessary circulating capital, as well as to cover COVID-19 losses to the extent necessary to mitigate the effects of the crisis. The company has estimated the damage from the COVID-19 virus at 22 million euros in 2020. This amount must be invested in the company through an increase in share capital.

"Nordica has found a niche and offers strong competition with its own existence, and with the support, they can recover better and stronger," Aas said. Prior to the emergency situation, Nordica's main activity was export, that is charter flights. "Should their contribution to flying from Tallinn prove necessary in the near future, they will immediately make an effort to do so," the minister added.

The most closely related to the Nordica brand are aircraft rental company Transpordi Varahaldus, Nordica and its subsidiary Regional Jet. "Such a structure was necessary when Nordica was founded, but this may not be the case today. Therefore, we still have a plan to consolidate the companies in the future, in the course of which it can also be decided whether to maintain the state's participation. All of these companies did quite well last year economically and would continue to do so today without the global crisis," Aas said.

As a result of the changed business activity and the COVID-19 pandemic, the supervisory board of the company has adopted a new strategy and approved a business plan, which has also been approved by the European Commission.

The increase in share capital and the loan constitute state aid, therefore the rules for granting state aid and the conditions of the temporary framework have also been complied with.

The government decided that Aas may authorize the granting of state aid to Nordica fully once negotiations with the company Polskie Linie Lotnicze LOT S.A on the acquisition of a 49% stake in Regional Jet OU have been concluded.

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