With the fall of the Soviet Union in 1990, the Baltic states of Estonia, Latvia and Lithuania were without a national carrier. All three newly formed countries started their own national carriers, with Lithuania starting Lithuanian Airlines in 1991, Estonia starting Estonian Air in 1991 and Latvia creating Air Baltic in 1995. Estonian Air started with a fleet of Yak aircraft that the defunct Aeroflot Baltic fleet had abandoned. The carrier started with the planes, but quickly started looking for the replacements, and in 1992, the airlines received a Boeing 737-500. The airline didn’t venture far from its main base in Tallinn, starting with flights mostly to Moscow, Scandinavia, and the other Baltic states.
Estonian used the 1990s and the fall of communism as a way to promote privatizing the national carrier, with investments quickly being generated as both Cresco Bank and Maersk took a combined 66% stake in the carrier. With the new financial backers, the airline added the Fokker 50 to the fleet, freeing the Boeing 737s to expand to new destinations including Amsterdam, London, and Vienna while the Fokker aircraft would service the existing route map.
The airline remained relatively stable through the rest of the 1990s. However, the airline came into hard times starting in 2003, with Maersk struggling to keep its own airline, Maersk Air, afloat. was forced to have their stake in the Estonian carrier transferred to SAS Group. The airline downsized as a result of the ownership transfer, and the Fokker 50s were retired in favor of larger Boeing 737s and Saab 340s. Estonian had hoped that flying to other airlines hubs and making alliances would draw more cash to the airline. Codeshare agreements were made with Scandinavian Airlines, KLM, and Aeroflot, whose hubs were all destinations for Estonian.
Even though the carrier had several codeshares, Estonian was still losing money due to a weakened Estonian economy and a small market to share with both low-cost carriers, such as EasyJet and RyanAir, as well as expanding neighbors like Aeroflot, Finnair, and Air Baltic. In 2008, the Estonian government announced they would take over majority ownership from SAS Group, claiming that the carrier was dangerously close to bankruptcy.
The Estonian government vowed to return the airline to a positive cash flow by 2012. The airline ordered Bombardier CRJ-900s and Embraer ERJ-170s to replace the aging Boeing 737-500s. The fleet renewal started, but the new planes were not resulting in renewed profits. The airline started to cut their longer flights as they hoped returning to a similar route map to what was profitable in the 1990s would help save the airline. The Boeing 737s were officially retired in 2011 as the brand new Bombardier and Embraer jets arrived.
The airline continued to bleed as the Estonian government injected cash into the airline to save the flag carrier. Cutting routes resulted in the Saab 340s and Embraer ERJ-170s to be retired in 2014 and 2015, respectively. On November 8, 2015, Estonian Air’s last chances of survival finally snapped. The European Union determined the cash injections that Estonian Air had received were illegal, and the airline was forced to repay the money that was injected, a total of €85 million. Already in debt and now forced to pay for illegal funding, Estonian Air ceased operations. At the time of bankruptcy, the airline operated three Bombardier CRJ-900s, two Bombardier CRJ-700s on lease and one Embraer ERJ-170. Since the airline was closely tied with SAS, the reward miles of those who flew Estonian Air were not impacted since Estonian used SAS’s EuroBonus mileage program. Due to Estonia being left with no flag carrier, a joint venture between the Estonian government and Croatian carrier Adria Airways was created to make a new carrier titled the Nordic Aviation Group, which was created the same day that Estonian Air ceased operations.
While Estonian Air would suffer as it attempted to compete with both giant airlines and low-cost carriers, it will go down in history as an airline that proudly represented its country.
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