Estonian Air eyes breakeven in summer

Photo: Kristjan Teedema / Tartu Postimees

The turnaround at Estonian Air is on track and the state-owned airline is planning to stop making loss already in summer, whereas by the end of the year it should be able to do without aid from the state, CEO Jan Palmer said at a press conference on Thursday.

"At the end of 2013 we won't need support any more, we'll be coping on our own," Palmer said. "We should be in rather good shape by then."

The airline is to cut its personnel from 200 to 150 this year, while in 2015 it plans to operate with a staff of 140. "I believe these numbers are a relatively good combination for a small airline, which we are trying now to achieve," he said.

To improve its financial situation Estonian Air intends to sell all its subsidiaries, which it actually doesn't need: Estonian Air Regional, Amadeus Estonia, and Eesti Aviokutuste Teenuste AS. "We will try and sell everything we can to earn as much free money as possible," the CEO said.

Besides the company is planning to sell offices and hangars. The plan is to reduce office space from the present 3,500 square meters to 950 square meters.

In addition to the aircraft to be returned to leasing companies this year the company needs to unload two more planes during 2013. In 2015 it would operate with five aircraft, or more if necessary. "In 2015 we can decide with what aircraft to operate," he said.

In order for Estonian Air to be cost-effective and sustainable a new concept will be launched in May. Instead of the previous five price classes the airline will go on with three, while preserving two service classes.

Estonian Air also is planning to increase earnings per passenger and try and sell more services on board.

In 2013, Estonian Air will fly to 10 destinations. After the end of the restructuring phase in 2015 two or three more destinations could be added, but not more because the Estonian market is too small for a bigger number of routes. "Opening of each new route requires an investment," said Palmer.

Speaking of destinations, the CEO said the company intends to continue operating direct flights to the most important destinations, at the same time optimizing the number of flights. "Considering the flight opportunities in Riga and Helsinki, Estonia is well covered in terms of air connections," said Palmer.