Estonian restructuring helps to slash net loss

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Estonia's government has approved a restructuring plan for the troubled flag-carrier, which managed to cut its net losses by 38% during the first quarter.

The Baltic operator has been undergoing a sweeping cost-cutting effort to address its difficult financial position.

It turned in a net loss of €4.9 million ($6.4 million) for the three-month period.

Estonian Air says its first-quarter revenues increased by 5% to €16.2 million and it is optimistic of breaking even on a monthly basis during summer. The airline is hoping to restore profitability by 2015.

"Estonian Air started with an extensive restructuring process in January and, regarding this, we have reviewed critically our network and all cost items," says chief executive Jan Palmer.

"The results of the first quarter give us confidence of being on the right track with the restructuring. We have succeeded to reduce the loss significantly and, at the same time, increase revenue with fewer passengers."

Palmer says the Estonian government approved the airline's restructuring plan on 2 May. It will file the restructuring plan with the European Commission in the second quarter.

The airline says it intends the plan to "resolve" a negative equity of €19.5 million for the end of the first quarter.

Introduction of the Embraer 170 helped push up fleet costs over the three-month period by 25%. The airline has four 170s plus three Bombardier CRJ900s. Leases on three other aircraft - a Boeing 737 and two Saab 340s - expire in the second quarter.