Can Flybe rescue Estonian Air?

13.02.2013, 11:23

Estonian government has been negotiating with British airline Flybe over a plan to set up a joint venture on the ruins of Estonian Air, writes Eesti Päevaleht.

A representative of Flybe confirmed to the paper that the airline has been holding negotiating over the terms and possibilities of flying to key destinations that are currently served by Estonian Air.

These negotiations have not been completed and there is no decision if and where it can happen.

Media reported last week that one of the options that is being considered by the Estonian government is to declare Estonian Air bankrupt and set up a new joint venture with another airline where the Estonian state would have a 51% holding.

Also Rasmus Ruuda, adviser to the Minister of Economic Affairs Juhan Parts, confirmed that negotiations have been held.

Ruuda emphasized that there are several options on the table, but the government’s objective is to restructure the airline.

“Our clear priority at present is to rescue Estonian Air and this is what we are working on,” Ruuda said last week.

It was reported last week that the government was considering two alternatives for Estonian Air: the first option that is being championed by Estonian Air CEO Jan Palmer it to bring the number of routes to a minimum, lease out excess aircraft to other airlines and bring the airline’s the costs to a minimum.

The other plan, known as the Raasuke plan by the chairman of supervisory board of Estonian Air Erkki Raasuke, aims to declare the airline bankrupt and set up a new company with some other airline such as Flybe.

Under the scheme, Flybe could own 49% of the new company while the Estonian state would own 51% because it would make it easier to apply for state aid.
Postimees wrote last week that Flybe is not the only airline that has been in negotiations with the Estonian government, but at present it is the most likely alternative.

Estonian Minister of Economic Affairs Juhan Parts and Erkki Raasuke, chairman of the supervisory board of Estonian Air and adviser to Parts would both like to see to reach an agreement with Flybe.

Raasuke did not comment the negotiations, saying that it was premature.

The government will discuss Estonian Air again this Thursday.