The Estonian government confirmed on December 3 that it will support Nordica's share capital by €22mn and provide a loan of €8mn to the struggling airline.

The government received permission from the European Commission to support Nordica to the tune of €30mn in August. The purpose of the state aid is to help it cope with the difficulties caused by the coronavirus (COVID-19).

Minister of Economic Affairs Taavi Aas said he received authorisation from the government to vote for increasing the share capital of the company as the minister responsible for involvement in Nordic Aviation Group.

In addition, the government decided that Aas can formalise the state aid package to Nordica once discussions about acquiring Polish airline LOT's stake in Regional Jet OÜ, a subsidiary of Nordica, have concluded.

"As a result of the discussion in the cabinet today [December 3], the specifications will be clarified and I very much hope that an additional session of the government will take place this week, where the allocation of funds will be decided," Aas said at a press conference on December 3.

The economic affairs minister continued: "Nordica has found a niche and is offering strong competition with its presence. With this support, they can recover better and stronger."

Nordica has assessed that the company will lose out on €22mn due to the coronavirus pandemic wiping out much of the travel sector. The government's communication unit stated that the funding must be provided through the share capital increase.

Nordica management board chair Erki Urva said the package helps the company survive the crisis. "This [support package] will mostly go to pay off debts that have developed. Let's just say that the European Union would not have given a state aid permit to a company that was in trouble before the crisis. So we did very well, we had concrete hopes to finish this year with solid turnover," the airline chief said.

The revised business plan scraps 12 direct flights from Tallinn. Urva said that there are still plans to fly from Tallinn, but the specific dates and times are not yet clear.

One of the conditions for granting state aid to Nordica is that the state must leave the company or recover the aid from the company within seven years. The Ministry of Economic Affairs and Communications (MEAC) does not currently have a plan to privatise Nordica.