Minister: lending money to Estonian Air is becoming a habit

08.02.2013, 11:18

“The government’s decision to lend to Estonian Air is becoming a habit,” Estonian Minister of Economic Affairs Juhan Parts said at the government press conference on Feb. 8.

Parts was referring to the decision that the government made this week to pay out the final loan instalment to the national carrier in the amount of EUR 4.5m.

“It’s becoming a habit, but the government is still keen to restructure the airline,” said Parts.

On Feb. 7 the government on Thursday decided to pay out the final instalment of the loan of 8.3 million euros for Estonian Air that the government decided on at the end of 2012. The size of the last instalment is 4.5 million euros and, according to the government, should keep the airline in business until beginning of March.

The size of the first instalment of the loan was 793,000 euros and it was paid the day the loan agreement was signed. The second instalment, or three million euros, was paid out on Jan. 18.

"Right now the focus is on the company's restructuring plan. The company continues working on it. That plan has to be such that it ensures the company's financial sustainability in the long term," said the minister.

The second subject is cooperation with the European Commission as regards a potential state aid procedure, which in the words of the minister can take very long. "European practice shows that it can take as much as two and a half years," he said.

"The situation in Estonian Air is dynamic and by all means we will have to discuss it in the government also in the coming weeks," Parts said.
When asked what happens when the airline has spent the loan, Parts said that what happens next depends on the actions of the company itself as well as the outcome of the restructuring.

“It also depends on ticket sales. We don’t want it to last long. We need to come up with a better decision for the country. Clarity is also in the government’s interest,” said Parts.

Speaking in the TV programme “Dialogue”, Parts said that he would resign gladly if it would make Estonian Air profitable, but that the most important thing now was to work.

When asked how long can Estonian Air avoid bankruptcy, Parts said that as long as he is the minister he works to make sure that Estonia has good air connections.

“I would not take this risk right now that we should let the market to handle everything. We need to look for solutions,” he added.

“Taking into consideration our small market, we cannot be sure that the market would satisfy our growing needs for air connections,” he said.

Parts said that he believed that some mistakes have been made over the years in running the airline, but that everything has been made in good faith.