Estonian Air

AS Estonian Air is the national airline of Estonia. Based in Tallinn, Estonian Air flies five mid-size Boeing 737 airliners to about a dozen destinations in Europe. It serves about 500,000 passengers a year. Traditionally, almost 90 percent of revenues have come from scheduled passenger operations. Estonian Air also operates charter flights and flies mail and cargo. Scandinavia's SAS Group is a major shareholder, with a 49 percent holding. The Estonian government owns 34 percent of shares; the remaining 17 percent are held by AS Cresco, an Estonian investment group. Estonia was part of the Soviet Union for 50 years. During this time, a local division of Aeroflot provided air services, carrying 800,000 passengers a year at its peak, according to Flight International. After the fall of the Soviet Union, Estonia regained its independence and on December 1, 1991, established a national airline, AS Estonian Air. Destinations to Germany, Finland, and Sweden were among the first served, a continuation of service from the Soviet airline Aeroflot. The airport operations were separated from Estonian Air in September 1992. By January 1993, Estonian was flying to Helsinki, Stockholm, Frankfurt, Copenhagen, and Amsterdam. It was increasing frequency of service to the West from the one to four weekly flights typical of the Soviet era, noted Airline Business. Though a tiny country of less than two million people, Estonia was hoping to justify having its own airline by billing itself as a gateway between East and West. The carrier joined the International Air Transport Association (IATA) soon after its founding and in 1994 formed a joint venture with Amadeus Holding, the global computer reservation service. Estonian Air faced competition by sea as well as by air on the 45-mile (85 kilometer) route between Tallinn and Helsinki. The airline's monthly passenger count on this route doubled to 6,000 immediately following the tragic sinking of the ferry Estonia in September 1994. Estonian Air underwent two major changes in the mid-1990s that made it more of a Western-style airline. The small fleet of Soviet aircraft was replaced with new Western planes, and the airline was partially privatized. The carrier had inherited from Aeroflot a fleet of about a dozen 72-seat Tupolev Tu-134s (only five of which were being used) and four smaller 26-passenger Yakovlev Yak-40s. These jets were relatively inefficient and noisy by Western standards. Estonian had also inherited a dozen propeller-driven An-2 biplanes. Estonian began leasing its first U.S.-made Boeing 737, configured for 109 passengers, in 1995. A second one entered the fleet the following year. The mid-size Boeing 737 was the global standard for low-cost carriers. In 1996, a pair of Fokker 50 turboprops were leased from Maersk Air for the short-haul commuter routes. The Russian-made aircraft Yaks and Tupolevs were retired by the end of 1996. At about the same time, according to Aviation Week, Aeroflot was compensated $700,000 for the spinoff of its Estonian division. Settling this claim allowed Estonian Air to resume suspended flights to Moscow. Estonian had about 500 employees in 1995, down from 676 two years earlier. The head count continued to drop, as the Boeings required fewer crewmembers and less maintenance. By 1997, Estonian had 380 employees--100 of whom were with the ground handling operation at Tallinn Airport, according to Aviation Week. The airline's pilots and flight attendants were unionized around January 1997. The airline was partially privatized in September 1996, with Maersk Air A/S of Denmark acquiring 49 percent of shares and Cresco Ltd., an Estonian investment group, taking 17 percent. The government retained a 34 percent stake. The airline was valued at about EEK 60 million ($10 million). Estonian got a new president, former Maersk Travel Managing Director Borge Thornbech. Maersk won the privatization deal over a higher bid from SAS Group, due to its plan to develo