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Estonian Air on a knife’s edge

Feb 06, 2014
From wire reports, TALLINN

If the European Commission’s decision regarding the legality of state aid to Estonian Air is negative, the airline will be legally obligated to reimburse the state 40.7 million euros of aid, reports LETA. Estonian Air’s CEO Jan Palmér said in this case, the company would go bankrupt immediately.

"We don’t have that kind of money. We have the money that we asked for in implementing the restructuring plan. A part of it is still unused but that won't be enough to pay back the government. Thus the company would be immediately liquidated," said Palmér.

The European Commission announced on it had opened an in-depth investigation to verify whether Estonia’s intention of granting 40.7 million euros of aid to restructure Estonian Air is in line with EU state aid rules.

The Estonian Economy and Communications Ministry noted that starting the investigation is a favourable development in proceedings. A positive outcome is an equally plausible outcome.

The ministry's deputy secretary general, Ahti Kuningas, said it is favorable that the European Commission started proceedings into the case, partly because the investigation process prescribes restructuring plans. "It has been done for everyone else, too, now. Earlier, Czech Airlines and Air Malta received favorable results from similar investigations, which took place the same way: first, a rescue aid application, then a restructuring plan, then the Commission starts its investigation. A final decision cannot be made unless the matter has been officially investigated," said Kuningas.

The European Commission is currently conducting another investigation regarding Estonian Air concerning earlier state aid, reports Public Broadcasting.

Most likely, the decision in the Estonian Air case won't be made by the current European Commission, whose tenure concludes this summer.
 

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