Estonian Air

Estonian Air was Estonia's national flag carrier from its establishment in 1991 until the end of its operations in November 2015. Based at Tallinn Airport, the airline connected Estonia with a changing network of European destinations and played an important role in maintaining international air links for a relatively small Baltic market. It was created by the Estonian government after the restoration of independence, using aircraft and operational resources inherited from the former local Aeroflot directorate. The company initially operated Soviet-built aircraft, but progressively modernized its fleet. It joined the International Air Transport Association in 1992 and received its first Boeing 737-500 in 1995. In 1996 the airline was partially privatized: Maersk Air acquired 49 percent and the Estonian investment bank Cresco acquired 17 percent. The new ownership structure supported the replacement of the Soviet fleet with Boeing 737-500s and Fokker 50 turboprops. Estonian Air subsequently retired its Fokker aircraft and developed a more commercially focused European network. Maersk Air sold its stake to SAS in 2003, making SAS a major strategic shareholder and partner. During the 2000s Estonian Air expanded and adjusted its route network several times, adding destinations such as Vienna, Minsk, Munich, Rome, Amsterdam, Berlin and Saint Petersburg while withdrawing from routes that did not perform adequately. In 2007 and 2008 it also experimented with regional operations using Saab 340 aircraft and created the wholly owned subsidiary Estonian Air Regional. That subsidiary served thinner routes from Tallinn and certain regional connections, but was closed in 2013. The airline experienced persistent financial difficulties, particularly from the middle of the 2000s onward. In 2010 the Estonian government provided additional capital and increased its ownership as SAS reduced its stake. The state regarded the carrier as strategically important to Estonia's connectivity and sought to stabilize it through recapitalization, fleet renewal and management changes. Estonian Air ordered Bombardier CRJ900 NextGen aircraft and pursued a plan to concentrate on a smaller regional-jet fleet. Management also announced ambitions to return the airline to profitability, but losses continued. Leadership changed again after weak financial results. Tero Taskila, who had previously worked at airBaltic, was removed as chief executive in 2012 and succeeded by Jan Palmér. The company continued to operate scheduled services, including flights to Nordic, Baltic and other European cities, but its financial position remained fragile. By the time it stopped flying, the fleet consisted of six aircraft: three Bombardier CRJ900s, two CRJ700s and one Embraer E-170. On 7 November 2015 the European Commission concluded that state support received by Estonian Air breached European Union state-aid rules and required the money to be repaid. The airline could not continue without the disputed funding. It ceased all flights on 8 November 2015 and entered liquidation. The Estonian government rapidly supported the creation of Nordic Aviation Group, later associated with the Nordica brand, to maintain essential air connections using aircraft and partner airlines. Estonian Air therefore remains historically significant as Estonia's first post-independence national airline, but it is no longer an operating brand.

Estonian Air was established by the Estonian government in October 1991, soon after the country regained independence. The airline inherited aircraft and operational resources from the former Estonian Aeroflot directorate and became the principal carrier representing the new state. It joined IATA in 1992. Its early fleet consisted largely of Soviet-era aircraft, but the company began a transition toward Western-built equipment during the middle of the decade. The first Boeing 737-500 arrived in 1995. In 1996 the government partially privatized Estonian Air, selling 49 percent to Maersk Air and 17 percent to Cresco investment bank. The airline leased Boeing 737-500s and acquired Fokker 50 aircraft, allowing it to retire its Soviet fleet. This modernization supported the development of scheduled services from Tallinn to European destinations. In 2003 Maersk Air transferred its shares to SAS, creating a closer relationship with the Scandinavian airline group. Estonian Air carried its 500,000th passenger in 2004. Network development continued during the late 2000s, although the airline also withdrew from routes that were commercially weak. In 2007 it added Vienna and leased Saab 340 aircraft. Estonian Air Regional, a wholly owned subsidiary, was established in 2007 to operate thinner regional routes, including services to Kuressaare, Stockholm, Helsinki and Vilnius, later adding Saint Petersburg and Minsk. The subsidiary was discontinued in 2013 and its assets were reintegrated into the parent airline. In 2008 Estonian Air announced new services to Minsk, Munich and Rome and planned to acquire Bombardier CRJ900 aircraft. At the same time, the company faced mounting financial pressure. SAS sought support from the Estonian government, and the possibility of further state involvement became a major political and commercial issue. In 2009 the airline abandoned Vienna, Frankfurt and Simferopol services, closed its ground-handling division, and introduced or developed connections including Amsterdam, Berlin, Saint Petersburg and Tartu–Stockholm. The government and SAS reached a new ownership and funding arrangement in 2010. Estonia injected 21 million euros in capital, reducing SAS's holding from 49 percent to 10 percent, while the government became the dominant shareholder. The state considered the airline strategically important and aimed to preserve Estonia's international connectivity. Estonian Air also pursued fleet renewal, receiving two CRJ900 NextGen aircraft in January 2011 and planning a further aircraft. It expanded or reopened services to cities including Trondheim, Riga, Helsinki, Vienna and Hannover in 2011 and 2012. The recovery plan did not produce sustained profitability. Chief executive Tero Taskila, appointed after experience in the Baltic airline sector, expected a return to profit but was dismissed after weak results in 2012. Jan Palmér became chief executive on 1 November 2012. The company continued to restructure its network and fleet, but its dependence on state support remained central to its survival. The decisive event came in November 2015. On 7 November the European Commission ruled that state funding supplied to Estonian Air violated EU state-aid requirements and had to be recovered. The amount to be repaid was reported as more than 85 million euros. Without access to further support, the airline ceased operations on 8 November 2015 and entered liquidation. The Estonian government arranged replacement services through Nordic Aviation Group, working initially with Adria Airways and other regional carriers. Estonian Air consequently disappeared as an operating airline, ending a 24-year period as Estonia's flag carrier.

• 2015

  Operations cease

  [1]Estonian Airen.wikipedia.org

  Following the European Commission's state-aid decision, Estonian Air stops flying on 8 November and enters liquidation.

• 2013

  Estonian Air Regional closes

  [1]Estonian Airen.wikipedia.org

  The regional subsidiary stops operating and its assets are returned to the parent airline.

• 2011

  CRJ900 fleet renewal

  [1]Estonian Airen.wikipedia.org

  Two Bombardier CRJ900 NextGen aircraft are delivered, supporting a regional-jet fleet strategy.

• 2010

  Government recapitalization

  [1]Estonian Airen.wikipedia.org

  Estonia provides 21 million euros in additional capital and increases its ownership as SAS reduces its stake.

• 2007

  Regional expansion begins

  [1]Estonian Airen.wikipedia.org

  Estonian Air announces Vienna service, leases Saab 340 aircraft and establishes Estonian Air Regional.

• 2003

  SAS becomes a major shareholder

  [1]Estonian Airen.wikipedia.org

  Maersk Air sells its stake to SAS, strengthening the airlines' strategic and commercial relationship.

• 1996

  Partial privatization

  [1]Estonian Airen.wikipedia.org

  Maersk Air acquires 49 percent and Cresco acquires 17 percent of the company.

• 1995

  First Boeing 737-500 delivered

  [1]Estonian Airen.wikipedia.org

  The airline begins its transition from inherited Soviet aircraft to Western-built commercial equipment.

• 1992

  IATA membership

  [1]Estonian Airen.wikipedia.org

  Estonian Air joins the International Air Transport Association.

• 1991

  Estonian Air is established

  [1]Estonian Airen.wikipedia.org

  The Estonian government creates the airline in October using resources inherited from the former local Aeroflot directorate.

Estonia's national flag carrier and a regional European airline focused on connecting Tallinn and other Estonian points with Nordic, Baltic and selected Central and Eastern European cities.

• Airline network · 1991

  Scheduled European passenger services

  Estonian Air's core offering was scheduled passenger transportation from Tallinn Airport to European destinations. Its network changed over time, covering Nordic, Baltic, Central European and Eastern European markets. Immediately before closure, the airline served 11 European destinations.

• Fare product

  Flex Class

  Flex Class covered business and flexible-economy fares. Passengers were seated toward the front of the single-cabin aircraft and received onboard food or snacks and beverages according to flight length and departure time. Alcoholic beverages were included in the fare, and eligible passengers could use the business lounge at Tallinn Airport.

• Fare product

  Eco Class

  Eco Class was Estonian Air's standard economy offering. Refreshments were generally sold from an onboard menu, although coffee, tea and water were offered without charge on all flights from March 2015.

• Regional airline subsidiary · 2007

  Estonian Air Regional

  Estonian Air Regional was a wholly owned subsidiary created to operate lower-density routes with Saab 340 aircraft. It served destinations including Kuressaare, Stockholm, Helsinki, Vilnius, Saint Petersburg and Minsk before closing in 2013.

• 2015

  State-aid ruling and forced liquidation

  The European Commission found that government funding provided to Estonian Air was incompatible with EU state-aid rules and required repayment. The airline could not continue without the support and stopped operations the next day.

  Source

Read more

• 2015

  Cessation and liquidationOther

  Background

  The European Commission required repayment of unlawful state aid, leaving the airline without the funding needed to continue.

  Action taken

  Estonian Air stopped all operations on 8 November and entered liquidation.

  Aftermath

  Nordic Aviation Group was established with government support to provide replacement services on important Estonian routes.

  State aid ordered to be repaid. More than EUR 85 million (2015)

  Source

• 2010

  State-led recapitalization and ownership increaseStrategy

  Background

  Estonian Air had suffered financial difficulties and was viewed by the government as strategically important for national connectivity.

  Action taken

  The Estonian government injected 21 million euros, reducing SAS's stake to 10 percent and making the state the leading shareholder.

  Aftermath

  The airline continued operating and pursued fleet and network renewal, but did not achieve a durable financial recovery.

  Capital injection. EUR 21 million (2010)

  Source

• 2010

  Adoption of Bombardier CRJ900 NextGen aircraftGeneration change

  Background

  The airline sought to modernize its fleet and move toward a more efficient regional-jet operating model.

  Action taken

  Estonian Air agreed to receive Bombardier CRJ900 NextGen aircraft, with two delivered in January 2011 and another planned for 2012.

  Aftermath

  The CRJ family became central to the carrier's final fleet, although fleet modernization did not resolve its financial problems.

  Source

1. 1Estonian Airen.wikipedia.org
2. 2European Commission state-aid decision concerning Estonian Airec.europa.eu