Estonian Air sells subsidiaries and raises prices

  • 2013-03-22

TALLINN – Estonian national carrier Estonian Air, which last year had a loss of nearly 50 million euros, intends to sell its subsidiaries, make at least 50 employees redundant and raise prices of tickets to compensate for expensive fuel, Postimees writes.

Estonian Air announced on Thursday that it had a loss of 49.2 million euros on 91.5 million euro turnover last year. While the turnover grew by 20 percent, losses reached 184 percent.

The company's finance manager Wade Stokes said that the activities of the previous managements of the company caused the loss.

In order to climb out of the losses, the company will make several changes in the next few months, the first of which is sale of subsidiaries. Estonian Air has stakes in three companies: Amadeus offers travel services, Eesti Aviokutuse Teenuste AS sells plane fuel and Estonian Air Regional works on local flights. While in the first two, two foreign companies have a stake and they might be interested in buying the majority stake, the latter belongs to Estonian Air fully and it may be hard to find a buyer.

The CEO of the company Jan Palmer said that sale of the subsidiaries is needed to get the state aid permit from the European Commission, which requires that a company that need help, gets rid of everything that isn’t necessary for its main activities.

The planned redundancies are also for the same reason: the company has 200 employees now and by the end of the year there should be 150.

Estonian Air's passengers can expect a ticket price increase in the near future due to increase of fuel surcharge. "Our current fuel surcharge doesn’t cover the increase of fuel price," said Palmer. The aim of the company is to increase income per passenger from 92 to 117 euros, he added.