Estonian Air (Tallinn Lennart Meri) is to be privatized with Infortarr Grupp, the investment firm behind the country's largest shipping and ferry company, Tallink, set to become the carrier's largest shareholder later next year.
In its restructuring plan submitted to the European Commission (EC) for approval last week, Infortarr said it would make "significant investments" into the carrier with effect from spring next year.
On November 3, Infortarr successfully acquired SAS Scandinavian Airlines' 2.66% stake in the carrier leaving the Estonian government with the remaining majority 97.34%. Tallinn has said it would be willing to water down its shareholding to "roughly" 20%.
"We are interested in a hundred percent ownership to guarantee effective decision-making," Infortar CEO Ain Hanschmidt told Tallinn's Postimmee's newspaper.
With the airline under its control, Infortar plans to return the loss-making carrier to profitability by 2016 using access to cost synergies across its stable of companies.
However, a potential stumbling block to the deal is a pending EC decision on whether or not EUR54million (USD66.96million) in funding extended to the carrier by government since 2009 conforms to EC state funding regulations.
Hanschmidt recently warned that Infortar's investment in Estonian Air is conditional on it being free of outstanding debts, loans, and losses.
"We need to get a company with zero balance, a clean company," he said.
Estonian currently operates three CRJ900s and four E170s on scheduled services to over 15 destinations in Europe in addition to charter flights to leisure destinations in Europe, North Africa, the Middle East and the Mediterranean. It also wet-leases an ATR42-500 and clinched a deal to operate flights from Gällivare and Arvidsjaur to Stockholm Arlanda in Sweden beginning in the autumn of 2015.
