ERR News – Estonian Air has disclosed a record-breaking net loss of 49.2 million euros for 2012. The previous biggest annual loss was 17.3 million euros in 2011, which in turn was six times greater than that of 2010.
Revenue amounted to 91.5 million euros, and operational losses to 35.8 million euros, which do not include one-off costs for impairment on aircraft, according to a press release. The costs associated with the attempt to grow the airline and expand the route network amounted to approximately 26 million euros.
"Late last year, the supervisory board of the company decided to change Estonian Air’s business model from growth oriented carrier to a regional point-to-point airline," CEO Jan Palmér said in the release.
"While the airline carried a record number of passengers in 2012, low yields from the transfer traffic did not support the airline’s bottom line. Although the airline brought four new jet aircrafts into service by the start of the summer season, overall the fleet transition proved to be more costly than planned," Palmér said.
Since January, Estonian Air has been operating according to the restructuring plan to become cost efficient, with the priority being to provide flights to high-demand destinations.
"Our turnaround is on track. We are changing from a traditional carrier to a small cost effective regional airline serving a core route network of 10 destinations. We have already succeeded in increasing the yield, signed collective agreements with the crew, started to divest non-core assets and thus starting to be where we want to be. This gives us confidence to sustain the business," Palmér said.
The 10 core destinations of Estonian Air are Stockholm, Copenhagen, Amsterdam, Brussels, Oslo, Moscow, St. Petersburg, Kiev, Vilnius and Trondheim.