Estonian Air promises to sort Bombadier deal

The airline is in a dispute with Bombardier that could threaten its rights issue bailout from the Estonian government.

TALLINN — Although Canadian plane manufacturer Bombardier had already sold the aircraft initially built for Estonian Air, the carrier promises that the ordered planes will hit the tarmac at Lennart Meri by 2011.

Estonian national airline Estonian Air paid 172 million krooni (€11 million) for three CRJ-900 planes, but due the uncertainty of how the carrier will pay the remainder of the purchase debt, the 1 billion krooni (€64 million) the contract was canceled. Bombardier later sold the planes to  a higher bidder.

The planes should have arrived to the carrier’s fleet park in 2009, but the agreement between the companies may not be reached before the end of 2010. In the worst case, Estonian Air may lose the 172 million krooni pre-payment, which however is unlikely.

The bad deal is delaying in the government bailout of the troubled carrier. Estonian Prime Minister Andrus Ansip told the press that “as long as this question is not completely clear, then Estonian government and SAS cannot sign the Estonian Air’s shareholders agreement.”

Regardless of the government’s displeasure with the situation, it is choosing not to intervene. Canadian Minister of International Trade Peter van Loan’s flew into Tallinn on Friday to discuss the issue with Ansip and both agreed that the issue is between two companies, not national governments.

Estonian Air said negotiations on buying new aircraft from Bombardier is being undertaken and are based on the terms set in the first contract. The intention is to use the €11 million payment for new planes.

Estonian Air CEO Andrus Aljas told the press that there is no time-specific pressure on the purchase of planes, as the airline’s six-plane fleet is currently sufficient given the reduced traffic.

“As Estonian Air has enough planes to operate on current flight schedule, then the time of delivery  of those planes it is important issue during the negotiations to match it with the return dates of some Boeings,” said Aljas

Estonian Air is doing its best so the delivery of those planes would happen at the end of this year or in the beginning of 2011, according to Aljas.

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