TALLINN - The Estonian national air carrier is fighting for survival after announcing that its losses in 2008 had trebled.
The financial results for 2008 revealed a loss of 171 million kroons (10.9 million euros), despite sales revenue rising by 6 percent to 1.46 billion kroons. This was over three times worse than the 52 million kroon loss incurred in 2007.
Estonian Air is jointly owned by the Estonian state 34 percent, the SAS Group, 49 percent and Investment Company AS Cresco, 17 percent.
Recently SAS have made it very clear it would like to dispose of its shares.
In a company statement Andrus Aljas, President and CEO of Estonian Air, said last year "was an extremely complicated one for commercial aviation both globally as well as in Estonia."
"The general negative trends affected greatly the activities of Estonian Air during the entire financial year. Results for the first half of the year were strongly influenced by the fuel price hike, pushing up operating costs," he said.
"In the second half of the year a significant factor was the sudden drop in demand, triggered by problems in the economic environment, a trend that will continue in 2009 and even into 2010," Aljas said.
"Last year's financial results did not make the shareholders happy, but in spite of the tough economic environment and the fast changes in the market, the Supervisory Council is expecting better results in the future. These will be achieved by realizing a cost cutting plan and widening the revenue basis," he said
Olev Schults, Chairman of the Supervisory Board of Estonian Air, said the company was planning to open new routes.
"The company is going to reopen direct flights to Amsterdam and Berlin and between Tallinn and St. Petersburg. In addition, regular routes between Tartu and Stockholm are in the pipeline," he said
Juhan Parts, the Minister of Economic Affairs and Communications told Aripaev that he ruled out further government financial backing in the immediate future.
Parts said that the managers of Estonian Air have had restructuring plans 's including launching new routes and purchasing new planes 's for some time already.
"If you ask whether I'm happy with the plan, then no, I'm not happy with the plan. But we have to understand the realities and react to them rather than rely upon wishful thinking," Parts said.
He said that "in the beginning of the year the Estonia government had already given 38.8 million kroons to Estonian Air. That is why there was no plan to give another cash injection in the near future."
Parts did confirm that although SAS was looking to sell their stake, the government had no such plans.
"SAS announced half a year ago that it wants to sell its holding in Estonian Air."
"Has anyone expressed their wish to buy the state's 34 percent holding in the company? No. And we wouldn't sell it even if anyone expressed their wish to buy," Parts said.
If Estonian Air were forced to cease operations it would have a major effect on Tallinn Airport. It has maintained its clear leading position at the airport with a market share of above 40 percent. It offers direct air services to 22 destinations from Tallinn.
"Estonian Air can't work with these losses for long, but if Estonian Air disappeared then the number of flights from Tallinn would go down by half," Aljas told Postimees.
"Last year global trends were working against us, this year will also be difficult as well, but we will get back on our feet as soon as the airline business environment improves," Aljas said.
