Nordica announces closure and bankruptcy amid financial challenges

Nordica announces closure and bankruptcy. Photo: Eero Vabamägi

As investor Lars Thuesen informed Nordic Aviation Group (Nordica) on Monday of his intention not to proceed with the privatization of the company, the management board of the Estonian state-owned airline, after assessing the economic situation, decided that the airline will cease operations and file for bankruptcy.

Bankruptcy petitions will be filed for Nordic Aviation Group and its subsidiary Xfly as soon as possible, Remco Althuis, the CEO of Nordic Aviation Group, said in a press release on Wednesday.

The Republic of Estonia, the sole owner of Nordic Aviation Group and Xfly, started the process of privatization of the company at the end of 2023. Over the past week, intensive negotiations have taken place, with both sides trying to reach a mutually acceptable agreement.

«Nordic Aviation Group and Xfly have gone through a difficult journey in the last 15 months, since the new management team took up its duties in August 2023. This process has required a great effort on the part of the whole team to take the airline on a new and lasting path,» the CEO said.

He emphasized that Nordic Aviation Group is very proud of the results achieved during this period, which ensured a solid economic position for the company by the spring of 2024.

«We have provided our clients with services according to the highest standards, as evidenced by our accuracy and service quality. Our partners have also praised our team for their excellent work,» Althuis added.

Kadri Land, chairperson of Nordic Aviation Group's supervisory board, said that unfortunately, the potential investor announced on Monday that he does not intend to proceed with the privatization due to excessive risks.

The company has informed its employees and business partners, including aircraft lessors, of its intention to file for bankruptcy.

«Our aim is to return the aircraft used by Nordic Aviation Group and Xfly to the lessors as soon as possible, probably in the coming weeks,» the CEO said. «This will involve all the formalities related to the bankruptcy proceedings, including notifying the Estonian Unemployment Insurance Fund.»