Nordica (ND, Tallinn Lennart Meri) and two affiliates Transpordi Varahaldus, a lessor and maintenance company, and Regional Jet, an ACMI specialist now branded as Xfly (Estonia) (EE, Tallinn Lennart Meri), will become three separate units under a newly created holding company ahead of possible privatisation, Estonia's minister of economic affairs and infrastructure, Taavi Aas, has said.

The state-owned flag carrier’s operations would in this way be rationalised and its inefficiencies reduced, Aas told local broadcaster ERR, while also distinguishing Nordica and the two affiliated companies more clearly from each other.

“We have three strong aviation companies whose growth makes sense to release Regional Jet from its subsidiary status. This will ensure the existence of two companies operating on an equal footing, which will allow each one to outsource and grow the business. This will create the preconditions for privatisation in the future,” he explained.

The management of the three companies has so far “proven successful, but there is some duplication within the group, which we can eliminate and create a greater net profit.”

Aas elaborated: “In aviation, it is customary to keep business lines and supporting activities separate for purposes of risk management, and so the business, operations, and asset management functions of the new group will still be maintained as separate companies but more structurally positioned under the management of the parent company.”

Formerly a virtual carrier, Nordica now has its own Air Operator’s Certificate (AOC), and while most of its aircraft remain on the books of Xfly, which wet-leases them to Nordica for its in-house operations, it has now begun to gather together its own fleet. It has been operating a Swedish PSO route linking Stockholm Arlanda, Arvidsjaur, and Gällivare under its own code since August 1 and aims to expand this to other scheduled passenger services.

According to the ch-aviation fleets advanced module, Nordica currently operates a single CRJ900ER, leased from TVH, while Xfly operates five ATR72-600s, one CRJ900, three CRJ900ERs, and five CRJ900LRs, and will soon take delivery of four E195LRs.

Aas clarified that before setting up the group, the ministry would consult with the European Commission to mitigate any state aid risks.

Asked for comment, Nordica told ch-aviation: “The idea is to create an umbrella organisation, where Xfly, Nordica, and TVH would be separate business units ('sister companies'). The holding company would provide to the daughter companies supporting and management services: finance and accounting, IT, legal, HR, PR, office management etc.” However, it added that it “cannot comment on possible privatisation issues.”