Estonian Air racked up a loss of €49.2 million ($63.9 million) in 2012 as one-off aircraft impairment costs compounded its operating losses in the year.
The carrier posted revenues of €91.5 million for the year, but incurred operating losses of €35.8 million over the same period. Estonian says costs associated with the attempt to grow the airline and expand its route network totalled €26 million. It marks a deepening on the €21 million operating and €24 million net loss it recorded in 2011.
"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," says Jan Palmer, who took the helm of the carrier in November. "Although the airline brought four new jet aircraft into service by the start of the summer season, overall the fleet transition proved to be more costly than planned.
"Late last year, the supervisory council of the company decided to change Estonian Air's business model from growth oriented carrier to a regional point-to-point airline." This has seen the carrier roughly half its workforce and cut its fleet down to five aircraft serving ten core destinations.
"Our turnaround is on track," says Palmer. "We are changing from a traditional carrier to a small cost effective regional airline serving a core route network of ten 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."