newstodate.aero
Feb 11, 2014 (newstodate): Profitability remains a goal for Estonian Air that has earlier set 2014 as the year of return to black figures. But is is more complicated than that...
-My expectations are that we will certainly see sustained black figures in results from our core route operations where we obtained positive results already during the last half of 2013, says Jan Palmer, Estonian air CEO.
-This is, however, only one part of the total picture when considering a full return to profitability. Another part is restructuring costs, and a third is the aircraft fleet.
-To help financing the restructuring process of the airline, we had to apply for a 37 mio euro loan facility provided by the state, of which 25 mio have been exercised. This comes at an interest rate that initially was 15 percent, now down to seven percent annually. Included in the restructuring costs are for instance social obligations following the reduction of staff from 337 to now 160 employees.
-Thirdly, we still have seven aircraft in the fleet while the current route structure requires only five aircraft. One of these two redundant aircraft has now been placed with ACS in an effort to seek ACMI contracts, but we still share the operational costs of this aircraft, in addition to the full costs of the second excess aircraft.
-While we can influence the result from the core route operations, we shoulder also the interest on the state loan as well as suffering the economic consequences of the two excess aircraft.
-We are happy and most satisfied to see the positive results from the turn-around of Estonian Air, but we still have a long way to go in balancing the negative effects from the loan interest and the excess aircraft capacity, says Mr Palmer.
Estonian Air owns the three Bombardier CRJ900 aircraft in the fleet, while the four Embraer E-170 aircraft have been leased from Finnair on a contract expiring by late 2015.
-My expectations are that we will certainly see sustained black figures in results from our core route operations where we obtained positive results already during the last half of 2013, says Jan Palmer, Estonian air CEO.
-This is, however, only one part of the total picture when considering a full return to profitability. Another part is restructuring costs, and a third is the aircraft fleet.
-To help financing the restructuring process of the airline, we had to apply for a 37 mio euro loan facility provided by the state, of which 25 mio have been exercised. This comes at an interest rate that initially was 15 percent, now down to seven percent annually. Included in the restructuring costs are for instance social obligations following the reduction of staff from 337 to now 160 employees.
-Thirdly, we still have seven aircraft in the fleet while the current route structure requires only five aircraft. One of these two redundant aircraft has now been placed with ACS in an effort to seek ACMI contracts, but we still share the operational costs of this aircraft, in addition to the full costs of the second excess aircraft.
-While we can influence the result from the core route operations, we shoulder also the interest on the state loan as well as suffering the economic consequences of the two excess aircraft.
-We are happy and most satisfied to see the positive results from the turn-around of Estonian Air, but we still have a long way to go in balancing the negative effects from the loan interest and the excess aircraft capacity, says Mr Palmer.
Estonian Air owns the three Bombardier CRJ900 aircraft in the fleet, while the four Embraer E-170 aircraft have been leased from Finnair on a contract expiring by late 2015.