Estonian Air pays contractual penalty of excess planes

Photo: SCANPIX

Estonian Air reaches deal of returning two planes it didn’t need, resulting in contractual penalties.

Estonian Air (EA) press secretary Ilona Eskelinen confirmed the airline had indeed reached agreement on two Embraer E190 type planes, ordered earlier but never needed for company’s principal activity. The process was on order-level, the planes not having come into EA’s hands yet.

At the beginning of March EA chairman Erkki Raasuke said that, in order to exit old contracts i.e. pay off contractual penalties, the last government loan allotted €8m. Even though Ms Eskelinen declined from confirming the sum, it can be guessed that the amount specified, in total or at least partly, was transferred to the leasing company to find new owners for the planes.

In addition to the planes returned, EA owns many more not needed within new austerity strategy – such as four Embraer E170 type planes – but, according to Ms Eskelinen, these are still being discussed. EA currently possesses ten planes, of which a half are needed. It is the toughest with the three Bombardiers purchased by EA’s former management, which are in low demand on aviation market due to their smallness.

Yesterday, Postimees turned to EA’s board and council for comments. However, both CEO Jan Palmér and Erkki Raasuke turned down the offer. The secrecy is explained by a press conference to be held tomorrow, where, in addition to announcing the riddance of planes, the company is expected to reveal its economic results and comment on current restructuring situation. For the latter, EA needs a total of €37m, of which some €12m are yet to be borrowed.

Prime minister Andrus Ansip has earlier said he wants EA’s final salvation plan on his table by April 18^th. Having received that, the state will present restructuring plan to European Commission.