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HomeEstoniaEstonian govt approves divestment of Nordica shares

Estonian govt approves divestment of Nordica shares

At its sitting on Thursday, the Estonian government approved a decision to grant the climate minister permission to divest 100 percent of the shares owned by the state in Nordic Aviation Group (NAG), operating under the Nordica brand.

The state is to divest 400,000 shares with a nominal value of 10 euros each, with the value of shares to be determined through competitive bidding. The state is selling NAG because the company provides subcontracting services and there is no reason to believe that it could start offering flight services from Tallinn. Therefore, the group lacks a strategic purpose for the Estonian state, according to government spokespeople.

NAG was founded in October 2015 with the main goals of ensuring flight connections from Tallinn, offering competition in the aviation market, and operating sustainably.

In the past almost eight years, the company’s fortunes have changed significantly on several occasions. The first major change in the company’s operation occurred in 2019 when NAG ceased flights from Tallinn because the competitive situation at the time with international airlines coming to Tallinn no longer allowed for profitable competition.

In 2020, both NAG and the entire aviation industry were hit by the COVID-19 crisis. To mitigate its effects, the company was granted state aid in October 2020, one condition of which was that the company must not operate loss-making routes. Considering the current market situation of airlines at Tallinn Airport, the prohibition set by the state aid means that NAG is not capable of starting flights from or to Estonia.

The consolidated net loss of the company last year was 19.1 million euros.

“As an impartial special audit has shown, the company has been mismanaged in the intervening periods. The state will direct additional funds, 14.5 million euros in the coming years, to Tallinn Airport to maintain the connections necessary for Estonia,” Sander Salmu, deputy secretary general for mobility at the Ministry of Climate, said.

The government’s decision creates the prerequisite that upon receiving binding offers, more detailed negotiations can be held with companies and a contract for the transfer of state assets can be concluded. Binding offers are expected to the privatization adviser by March 8.

Source: BNS

(Reproduction of BNS information in mass media and other websites without written consent of BNS is prohibited.)

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