The government approved an increase in Nordica’s share capital by 22 million euros

Tallinn, Stenbock House, 15 October 2020 – At the evening e-session, the government approved a decision to increase Nordica’s share capital by 22 million euros. The company will also receive a loan of 8 million through euros from SA KredEx with a term of 31 December 2026. Taavi Aas, Minister of Economic Affairs and Infrastructure, as the minister in charge of the state’s holding in the company, received an authorisation from the government to vote in favour of increasing the share capital of Nordic Aviation Group.

The purpose of the share capital increase and loan is to ensure the company’s sustainability, smooth economic operations, and the necessary working capital, as well as to cover COVID-19 losses to the extent necessary to mitigate the effects of the crisis. The company has estimated the damage from the COVID-19 virus at 22 million euros in 2020. This amount must be invested in the company through an increase in share capital.

“Nordica has found a niche and offers strong competition. With the support, they can recover better and become stronger,” said Minister of Economic Affairs and Infrastructure Taavi Aas. Prior to the emergency situation, Nordica’s main activity was export, i.e. charter flights. “Should their contribution to flying from Tallinn prove necessary in the near future, they will immediately make an effort to do so,” the minister added. Before the crisis, Nordica operated almost 100 flights a week in cooperation with partners, helping to connect Tallinn to four destinations.

Transpordi Varahaldus (aircraft rental), Nordica, and its subsidiary Regional Jet are most closely related to the Nordica brand. “Such a structure was necessary when Nordica was founded, but this may not be the case today. Therefore, we still plan to consolidate the companies in the future, in the course of which the state’s participation can also be decided on. All of these companies did quite well last year financially and would have continued the trend this year if the global crisis had not happened,” said Aas.

As a result of the changed business practices and the COVID-19 pandemic, the company’s council has adopted a new strategy and approved a business plan, which has also been approved by the European Commission.

The increase in share capital and the loan constitute state aid. Therefore, the rules for granting state aid and the conditions of the temporary framework have also been complied with.

The government decided today that Minister Aas may finalise the state aid to Nordica once the negotiations to buy out LOT’s shareholding have been completed.