SAS Lends To Cash-Strapped Estonian Air

January 21, 2009

Scandinavian airline SAS has lent Estonian Air funds to help it meet operating costs, the company said on Wednesday, with media in the Baltic state putting the sum at EUR200 million euros (USD$259.6 million).

SAS, itself loss making and carrying out a savings plan, owns 49 percent of Estonian Air and wants to buy the 34 percent owned by the state, but Estonia's government has so far declined to sell.

"Estonian Air has received financing from SAS, but unfortunately we cannot comment on the details of this agreement," Andrus Aljas, chief executive of Estonian Air was quoted as saying.

Estonian media quoted a source at the Economy Ministry as saying the loan was worth around EUR200 million and was to help cover operating costs, as the company had used its own reserves for the purchase of three new Bombardier aircraft, which are due for delivery in the coming months.

The third owner of the airline is Estonian-based investment bank Cresco, with a 17 percent holding.

SAS also owns 47.2 percent of Latvian airline airBaltic, but last year said it would sell this holding to airBaltic's management as the government did not want to fully privatise it.

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