TALLINN - Estonian Air will need a new cash injection at the end of 2012, unless the coming months bring decisive changes to the airline’s financial results, according to some sources available to Postimees.
Last year, the national carrier made a loss of 17 million euros. This year, the Estonian government invested 15 million euros into the company, as it did last year. Neither the company, nor the Ministry of Economic Affairs and Communications, are prepared to disclose how much of this money has been spent during the first few months of the year.
While Estonian Air has doubled its number of passengers, it has been unable to significantly reduce its costs. The costs have also grown because the airline has had to replace its fleet – the long-awaited Bombardier planes from Canada were not suited for the company.
The significant loss was also the reason why Minister of Economic Affairs Juhan Parts, who represents the state – i.e. the owner of the aviation enterprise – replaced Joakim Helenius as the chairman of the company’s supervisory board and appointed his new advisor, Erkki Raasuke, in this position.
Former CEO of Estonian Air Andrus Aljas stated that the objective set for the current management board of the airline is unrealistic. “Unfortunately, the reality in the aviation business is that it is impossible to expand quickly while earning a profit. I cannot bring any examples from history where such a feat has been managed,” he explained.
Sticking to the plan
Estonian Air’s CEO Tero Taskila plans to lead the company into profits with its earlier concept, despite losses, reports Eesti Paevaleht. In an interview with Eesti Paevaleht, Taskila answered the question: how big were Estonian Air’s losses in the first six months of the year, by saying that they know the figures but aren’t yet revealing them publicly, and the real results will become clear at the end of the year.
“But I confirm again that Estonian Air is not in a crisis. We just haven’t had enough time to make a lot of decisions on cutting costs since we have been involved in attracting people to planes and new routes,” he said.
Commenting upon the recent changes in the company’s council, Taskila said that two new members were appointed as the terms of two earlier ones expired. As to why Raasuke will take over the chairman’s post from Helenius, Taskila said that “since the council chairman will start evaluating our progress more in detail, Erkki Raasuke, who is better prepared for time consuming work, was appointed as the council chairman,” he said.
Taskila acknowledged, though, that losses in the first half of the year were bigger than forecast.
Estonian Air announced that its passenger numbers doubled in June, and was up by 51.4 percent in the first six months of this year. In June, Estonian Air carried 100,316 passengers, of which 100,010 were on regular flights. The number of passengers on regular flights out of Tallinn increased 97.3 percent compared to the same period last year. The load factor of Estonian Air regular flights was 78 percent, which is more than 10 percentage points higher than the year before.
In the first six months of this year Estonian Air altogether carried 423,581 passengers, of which 422,625 were on regular flights. The total number of passengers on regular flights increased 51.4 percent compared to the same period last year.
In the first six months of the year Estonian Air operated 9,484 flights, which is 72.1 percent more than during the same period last year. In June the airline operated 2,051 flights, which is 101.7 percent more than during the same period last year.
In the first six months of the year the regularity of Estonian Air flights was 98.8 percent and the 15-minute punctuality was 83.5 percent. In June the regularity and punctuality were 99.8 percent and 84.7 percent, respectively.
The airline currently flies to 24 destinations in Europe, Scandinavia and the CIS.