Estonian Air (OV, Tallinn Lennart Meri) has announced that it will cease operations as of Sunday, November 8. The Estonian national carrier has arranged replacement flights for passengers affected by the grounding with travel dates on November 8, 9 and 10. Those booked on Estonian Air flights starting November 11 will receive full refunds from the carrier.

The decision to suspend operations follows a European Commission (EC) ruling that financial aid provided by the Estonian government to Estonian Air breached EC rules and that the airline would therefore have to repay "EUR85 million plus interest". EU commissioner Margrethe Vestager also argued that Estonian Air did not "carry out the necessary restructuring to become viable as a business" after receiving the funds.

The EC said that although two state-backed capital increases - a EUR2.48 million recapitalization and the EUR2.4 million sale of Estonian Air’s ground-handling operations to the state-owned Tallinn Lennart Meri Airport in 2009 - were legal, other subsequent ones were not. These include: recapitalizations of the airline with EUR17.9 million in November 2010 and EUR30 million issued in two tranches in December 2011 and March 2012; a rescue loan facility of EUR37 million issued in several tranches between December 2012 and November 2014; and a planned additional state capital increase of EUR40.7 million which the EC has now forbidden.

As reported by ch-aviation, Estonia's Economy Ministry has already established a new holding company - Nordic Aviation (Tallinn Lennart Meri) - in anticipation of the likely negative ruling. Nordic Aviation will use the final tranche of EUR40.7 million for initial capex requirements with domestic and foreign investors being offered stakes in the new national airline.

With Estonian Air grounded and lacking its own AOC, Nordic Aviation will commence operations on November 8 using Adria Airways' AOC, commercial platform, and ticketing system. Aircraft will be chartered from the Slovenian carrier as well as from bmi regional (BM, Aberdeen Dyce) (E145s), NextJet (2N, Stockholm Arlanda) (BAe ATPs), Trade Air (C3, Zagreb) and Carpatair (V3, Timisoara) (Fokker 100s).

Nordic Aviation will continue to serve Amsterdam Schiphol, Brussels National, Copenhagen Kastrup, Stockholm Arlanda, Oslo Gardermoen, Kyiv Boryspil, Trondheim, Vilnius and Munich from Tallinn, but cannot assume Estonian Air's St. Petersburg and Moscow Sheremetyevo routes due to missing traffic rights. While the carrier will no longer serve Stockholm Bromma, it will take over Estonian's Copenhagen Kastrup-Örebro operations.

Operators directly affected by the ruling include Estonian's partner NextJet (2N, Stockholm Arlanda) which will have to wet-lease another ATR turboprop for its Stockholm Arlanda to Gällivare and Arvidsjaur routes previously served using Estonian Air's CRJ900s.