The Estonian government has confirmed that it will inject EUR22 million euros (USD27 million) into the share capital of flag carrier Nordica (ND, Tallinn Lennart Meri) and will additionally transfer a loan of EUR8 million (USD10 million), economy minister Taavi Aas revealed at a press conference.

Aas said he had received authorisation from the government to provide the Covid-combating state aid, which already has the blessing of the European Commission. The package will be formalised once discussions on acquiring LOT Polish Airlines’ 49% stake in Nordica’s ACMI/charter subsidiary Xfly (EE, Tallinn Lennart Meri) have concluded.

He said at the December 3 news briefing, as quoted by bne IntelliNews: “As a result of a discussion in the cabinet today, the specifications will be clarified and I very much hope that an additional session of the government will take place [soon] in which the allocation of funds will be decided.”

He added: “Nordica has found a niche and is offering strong competition with its presence. With this support, it can recover better and stronger.”

According to chief executive Erki Urva, a revised Nordica business plan scraps the virtual carrier’s planned launch of an initial batch of 12 scheduled routes from Tallinn Lennart Meri. Nordica still aims to commence scheduled operations, he said, but the specific dates and times are not yet clear.

“This [package] will mostly go to pay off debts that have developed. Let’s just say that the European Union would not have given a state aid permit to a company that was in trouble before the crisis. We were doing very well, we had concrete hopes to finish this year with a solid turnover,” Urva said.

One condition for the rescue is that the state must exit the company or recover its investment within seven years. However, there are no plans for the moment to privatise Nordica.

In an interview with Estonian broadcaster ERR on December 11, Aas revealed that he had signed a draft agreement on the transfer of LOT’s stake to Nordica, expressing the hope that the Polish side would sign it by the end of the year.

During the summer, Nordica was criticised in Estonia for being in no hurry to open routes from Tallinn. Now, however, this decision can be seen as the right one, as Latvian competitor airBaltic (BT, Riga) has suffered significant losses in comparison with Nordica, the minister said.

“Nordica has behaved very wisely. It parted with LOT in a friendly way; in particular, it will continue to be able to use LOT’s platform for selling tickets. As far as competition with the Latvians is concerned, the size of the fleet is more or less the same for both airlines but they have much larger aircraft. Our losses will be EUR20 million [USD24 million], their losses over EUR200 million [USD240 million]. It shows we’re on the right track.”

On the prospects for travel in 2021, the minister declared: “It cannot be ruled out that when vaccination reaches the majority of Europeans in the spring, there will be an explosive increase in air travel. People’s expectations for travel are huge.” He added that beyond this provision of state aid, Nordica “does not need additional help. It all depends on how the market opens in the spring. This will not happen in winter.”