Airport, Estonia, EU – Baltic States, Investments, Legislation, Transport

The prerequisite for the deal is that the European Commission rules that the nearly 25 million euros state aid granted to Estonian Air in recent years is legal, Postimees Online adds.

"We are interested in 100% shareholding, which ensures effective decision-making," said the head of Infortar Ain Hanschmidt at today's press conference. Estonia's most influential investor in the tourism sector Infortar is also holding talks over buying the 10% minority stake in Estonian Air that belongs to SAS. The rest of Estonian Air belongs to the Estonian state.

The state may be interested in keeping a 10-20% stake in Estonian Air to earn dividends from the company's expected profits. "I think it credible that by 2016, Estonian Air will reach profit," said chairman of the council of Estonian Air Ahti Kuningas. "For the European Commission, Infortar entering the circle of Estonian Air's shareholders is a strong argument that the aid granted by the state was in line with market conditions, and was not illegal."

Hanschmidt said that the actions of the national airline's management satisfy the new shareholder. The company will continue operating under the current business plan, as a regional airline, but needs to fly to more destinations and with more planes to earn a bigger profit.

Estonian Air requires a minimum of 20 mln euros of investments in the coming years, but the liquidity is guaranteed with smaller funds.

The parties did not want to disclose the potential cost of a sales transaction.

Estonian economy minister Urve Palo said, commenting upon the plans to sell Estonian Air that the state has been looking for a new owner for Estonian Air since 2011 and has communicated to 5-6 possible partners, among whom Infortar has the best vision by far. Palo said also that it is hard to forecast whether there would be opposition to the plan in the government, which has to okay the transaction. It is also too soon to say whether and how big a part of the airline would stay in the state's hands.

It was announced on Wednesday that Infortar Grupp, which owns Estonia's largest passenger shipping company Tallink, can become the majority shareholder of national carrier Estonian Air, as the airline's council on Tuesday approved of a revised restructuring plan, that stipulates that and that will be submitted to the European Commission on 31 October. If the restructuring plan is approved, Infortar will make an investment in the airline in the spring of 2015 most likely, Public Broadcasting reported.

Estonian Air's 2013 loss was EUR 8.1 million. In the first half of this year, the airline's loss was EUR 5 million. European Commission is still investigating whether the money allocated to Estonian Air by the state in crisis years was state aid, which is banned, or extra capital needed for restructuring.

AS Infortar is an Estonian capital based investment company, which owns, among other things, 36% of the Baltic Sea leading shipping company AS Tallink Grupp. The company's focus is on investment in the tourism sector, the transport sector and real estate development.