Bloomberg News

Estonian Air State Aid Probed by EU Antitrust Regulator

February 20, 2013

AS Estonian Air faces an in-depth probe by the European Union executive over concerns state aid for the Baltic country’s national carrier wasn’t in line with the bloc’s rules.

The European Commission will examine about 65.5 million euros ($88 million) in capital increases given to the carrier by the Estonian government since 2009, it said in an e-mailed statement today.

The commission started similar probes of Slovenia’s Adria Airways d.d. and Latvia’s AirBaltic AS last November as EU rules restrict amounts of aid nations can give to prop up carriers weighed down by the bloc’s sovereign debt crisis and high oil prices. Malev, Hungary’s unprofitable state-owned airline, folded last year after the EU ordered it to repay state loans and guarantees.

While Estonia notified the Commission last December of a plan to grant an 8.3 million-euro rescue loan to the carrier, it has also made three capital injections earlier without notifying the regulator, the EU executive said. The sale in 2009 of Estonian Air’s groundhandling business to the state-owned Tallinn Airport may also have involved state aid to the carrier, it added.

Estonia considers that its support for the airline is in line with EU state aid rules, Ahti Kuningas, the deputy secretary general at the Economy Ministry, said in an e-mailed statement.

“The government has thoroughly considered capital injections after acquiring the majority stake in Estonian Air. ‘‘The owner’s activities have been underpinned by the understanding that on one hand, the Estonian state needs flight connections, and on the other hand, that the company can be restructured into a sustainable and profitable air carrier.

Estonian Air spokeswoman Ilona Eskelinen didn’t immediately reply to calls seeking comment.

To contact the reporters on this story: Peter Chapman in Brussels at pchapman10@bloomberg.net; Ott Ummelas in Tallinn at oummelas@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net


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