Estonian Air is to cease operations after being ordered by the European Commission to pay back over €85 million ($91 million) in funding.
The airline has also been blocked from receiving another €40 million of restructuring aid.
Estonian Air says it will “terminate all flights” on 8 November.
In its ruling, following an in-depth investigation into the airline’s financing, the Commission stated that the support from the government gave the carrier an “undue advantage”.
Estonian Air “needs to pay back” the aid already received, it says, adding that the aid measures amounted to “repeated public support that did not enable the company to become viable again”.
“Companies should compete based on a sustainable business model rather than relying on continued support by the state to stay in the market,” says European competition commissioner Margrethe Vestager.
She says Estonian Air did not carry out the restructuring needed to adopt such a model.
“It would not be a good use of taxpayer money to keep Estonian Air in the market artificially,” says Vestager. “Nor would it be fair to competitors, which have to compete without such support.”
Estonian Air operates a small fleet primarily comprising Bombardier CRJ700 and CRJ900 regional jets.
Source: Cirium Dashboard
