Estonian Air ceases operations following EU subsidies ruling

Estonian Air ceased all operations Saturday, just hours after the European Union ruled the airline repeatedly benefited from illegal government subsidies.

The government of Estonia acknowledged it received a notification from the European Commission, the European Union antitrust regulator, ordering it to recover €85 million it pumped into the airline over the past five years.

The European Commission said Estonia’s “repeated public support” for its national carrier didn’t enable it to become viable again and didn’t limit distortions to competition. In response, the government said that since Estonian Air didn’t have €85 million to pay back the state, it saw no alternative but to close the airline.

Jan Palmer, Estonian Air CEO, said he regretted the airline wasn’t given more time: “We could have been sustainable in the future,” he said. “The company should have been allowed to be able to continue.” 

Shortly after Estonia announced it was closing Estonian Air, Latvian airline airBaltic issued a statement pledging to open more routes from Tallinn under open-skies rules.

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