Estonian Air on Thursday sold its main building to another state-owned company, Tallinn Airport, for 7.5 million euros.
Estonian Air sells its main building to Tallinn Airport for EUR 7.5 mln
4th April 2013, 18:59
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Estonian Air said it will continue to rent office space on the two upper floors of the four-story building at Lennujaama 13 from the new owner under a long-term rental agreement.
Estonian Air put the property up for sale in late 2012 and received two independent offers to buy the building. As of April 4, 2013 the property belongs to Tallinn Airport. The value of the sales contract is 7.5 million euros. The building is situated on land belonging to Tallinn Airport and legally the transaction means termination of the right of superficies, after which the owner of the building is Tallinn Airport, Estonian Air said.
"In the process of changing the business model of Estonian Air the company has decided, among other things, to divest its non-core assets and the sale of office building is part of that process," Jan Palmer, CEO of Estonian Air, said. "We have already reduced our operations considerably and thus our need for office space is remarkably lower than before."
Palmer added that making the structure of Estonian Air more cost effective has reduced the amount of office space necessary for operations 3,500 to 950 square meters.
Tallinn Airport said the acquisition was in line with its business operations. "Due to enormous competition in the aviation market and pressure on airport fees, Tallinn Airport has to earn a greater share of its income outside flight operations – just like any other airport in Europe," said Lauri Linnamae, communication manager for Tallinn Airport. "This is to ensure we stay competitive with our airport fees and provide our society with best possible flight connections."
Tallinn Airport's business policy has been to own the property situated on its land and to lease it to different operators, said Linnamae. Tallinn Airport has similar agreements also with other companies operating in its territory.
Tallinn Airport will seek to rent out the remaining floor area of Lennujaama 13 to interested operators in the airport.