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Monday, 01.09.2014, 14:14
Estonian Air's loss may be slightly bigger than expected
Estonian Air's council chairman Jaan Tamm and council member Erki Urva confirmed that the unaudited loss in that range. The company CEO Jan Palmér didn’t wish to talk about figures yet but said that they are fulfilling the restructuring plan that was submitted to the European Commission a year ago.
"If we distribute our business into parts, then the main activity that we want to continue with in long-term perspective will most likely post a profit," said Palmér. "But then we have two planes that we cannot get rid of. We try to conduct as many charter flights with them as possible but we are not in black with them yet. Also last year, the majority of restructuring took place. We reduced the number of employees and planes and sold property."
Palmér said that the loss is mainly the result of extraordinary expenses and the fact that not enough activities have been found for the excessive two Embraer 170 planes for which there is no demand at the market either and that haven’t thus been sold.
The work of auditors is made more difficult by the fact that the European Commission is still investigating whether the money allocated to Estonian Air by the state in recent years has been state aid, which is banned, or extra capital needed for restructuring, which is why the equity capital of the company is negative due to the 49 mln euros loss of 2012. The 37 mln euros loan the state allocated cannot be converted into equity capital before the Commission makes its decision. Operating with negative equity capital is illegal according to business laws. In 2012 the equity capital was by 14.7 mln euros in red and last year it most likely increased by the loss.
Ernst & Young that audited the 2012 report said that since they didn’t receive enough certainty about the results of the European Commission investigation, they could not issue an opinion about the annual report.
Palmér said that while auditors have a lot of questions now, that still need answers, he hopes that Deloitte that audits the report this year won't refuse to present an opinion.
Palmér said that Estonian Air will most likely reach a profit in 2015 in case of a positive decision by the European Commission.