Nordica (EE, Tallinn Lennart Meri) has signed a new cooperation agreement with LOT Polish Airlines (LO, Warsaw Chopin), wherein the Polish flag carrier will assume the commercial risk of all operations of the Estonian virtual carrier with effect from July 1, 2019.

"Strong competition and oversupply of seats on Tallinn Lennart Meri routes do not allow us to operate profitably, today. In order to maintain readiness and our ability to provide the necessary regional air connections to Estonia in the future, Nordica will continue to provide air services and LOT will deal with routes and ticket sales and will carry the commercial risk," member of Nordica's board Kristi Ojakäär said in a statement.

As a part of the reorganisation, Nordica will close its services from Tallinn to Kiev Boryspil, Copenhagen Kastrup, Trondheim, Vienna, and Vilnius at the end of the Summer 2019 season. Flights to Stockholm Arlanda, Brussels National, and Warsaw Chopin will continue but will be operated directly by LOT from July 1, 2019.

Regional Jet (EE, Tallinn Lennart Meri), Nordica's subsidiary which has been 49%-owned by LOT since March 2017, will continue to operate as an ACMI/charter specialist. It will, among others, provide capacity to LOT.

"We have been performing the role of a direct air service provider for several years, leaving the commercial risk to the vendor. We will now implement this model in all markets," Ojakäär said.

ERR has reported that despite the changes, Nordica is currently working on establishing its own booking system.

According to the ch-aviation fleets advanced module, Regional Jet currently operates seven ATR72-600s, two CRJ700s, and ten CRJ900. Two CRJ-700s and two -900s operate on behalf of Nordica, while five -900s operate for LOT. The remaining aircraft are available for short- and long-term wet-lease to third-party customers and are currently leased to SAS Scandinavian Airlines, flybe., Blue Islands, and Air Serbia.

Nordica itself is 100% owned by the state and does not have its own AOC. As a part of the existing partnership, the Polish flag carrier provides its code and access to own distribution channels but incurs no commercial risk. Nordica's flights are currently operated by Regional Jet under LOT's code.

The Estonian group also includes Transpordi Varahaldus, a lessor owned by a consortium of Estonian banks, which owns seven CRJ-900s operated by Regional Jet.

Nordica, Regional Jet, and Transpordi Varahaldus were incorporated in 2015 to take over the routes and the fleet of bankrupt state-owned Estonian Air (OV, Tallinn Lennart Meri).

Nordica and LOT operations from Tallinn have been under growing pressure from airBaltic (BT, Riga), which currently has a 25.9% market share at the airport by capacity and is the largest carrier in Estonia.