Skift Take

The EU should consider the political benefits of relaxing rules for smaller nations in the group. Especially those on the fringes, and those within a day's drive of Russia.

Estonian Air will cease operations after the European Commission ordered it to pay back aid it received from the government.

The state-controlled airline will stop flying from Sunday, it said on its website. Aid given by Estonia to the carrier gave the company an “undue advantage” over its competitors, breaching EU state aid rules, the European Commission said in a statement Saturday.

Estonian Air needs to pay back state aid of about 85 million euros ($91 million) plus interest and can’t receive an additional 40 million euros restructuring aid, the Commission said.

“Estonian Air has repeatedly received public subsidies over the past five years but did not carry out the necessary restructuring to become viable as a business,” EU Competition Commissioner Margrethe Vestager said in a statement.

While EU guidelines stipulate that state aid can only be granted once in a 10-year period, Estonia granted at least three subsidy measures to Estonian Air between 2010 and 2014, the Commission said. The airline “will start a liquidation process,” it said in an e-mailed statement.

Estonia owns a 97.34 percent stake in the carrier, according to the Commission. The Baltic nation set up last month a new airline, Nordic Aviation Group, as it prepared for the Commission ruling. SAS AB owns 2.7 percent of Estonian Air.

The probe by the Commission was announced in February 2013.

This article was written by Angelina Rascouet from Bloomberg and was legally licensed through the NewsCred publisher network.

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Tags: estonian air, european union

Photo Credit: Estonian flight attendants with the airline's in-flight Wi-Fi devices. Estonian Air

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