National carrier's future up in the air

  • 2007-08-29
  • From wire reports
TALLINN - Speculation over the future of Estonian Air has taken off in recent weeks, with the airline's major shareholders airing widely differing agendas.
Majority owner SAS Scandinavian Airlines wants to see Estonian Air merged with Latvian carrier airBaltic, while various coalition parties in the Estonian government are in disagreement over what to do with their stake in the airline.
Members of the Reform Party want to investigate the possibility of offloading the government's 34 percent holdings in the national carrier to SAS, which has previously stated its desire to increase its stake in Estonian Air.

But Reform's coalition partners, IRL, are not so eager. Minister of Economic Affairs and Communication Juhan Parts said the state would not rush to sell while the aviation industry was still developing.
Parts, a member of the conservative IRL party, said the state wanted to see Estonian Air develop, particularly by increasing the number of direct connections to and from Tallinn. He named Asia and America as important destinations for the air carrier. These goals could be achieved only if cooperation between the state and the carrier is ensured, and the best guarantor of this would be keeping hold of the state's stake.
His comments came after Estonian Air's president and board chairman, Borge Thornbech, announced Aug. 22 that he would resign. Thornbech was chairman from January 2005, though he served in the same capacity from 1996 - 2000.

It is widely believed that development of Estonian Air has stagnated in recent years as the company struggles with repeated flight delays that have hammered its reputation.
Parts has previously expressed concern over the airline's development, complaining that attempts were made to find solutions "via the media." At the shareholders' general meeting in May, the minister expressed dissatisfaction with the results and the company's development plan.
Meanwhile, plans to merge the two Baltic airlines were raised by SAS managing director Mats Jansson in the German paper Handelsblatt.

SAS owns 47 percent of airBaltic, while 53 percent remains in the hands of the Latvian government. Jansson said the company was now holding talks with both governments about offloading their stakes.
Parts is scheduled to meet with representatives of SAS in mid-September to discuss the proposal.