“In the past few months, the economic situation of Nordica has deteriorated sharply, and the company’s revenues have turned out to be considerably lower than expected. In turn, the costs significantly exceed revenues,” explained David O’Brock, the chairman of the Supervisory Board of Nordic Aviation Group. “The situation in the aviation market is very difficult – there’s a delay in leased aircraft with which Nordica is supposed to service its clients, there is a deficit in both workforce as well as equipment; the costs of all inputs have risen. All those aspects have turned Nordica’s business onto a path of loss.”
According to preliminary data, the consolidated revenue of Nordic Aviation Group (Nordica & XFly) in the first 6 months of 2023 was 54,9 million euros and the loss amounted to 7,2 million euros.
“To ensure the company’s sustainability, the Supervisory Board in coordination with the Shareholder decided to bring international aviation expertise into the company in order to turn the company’s business onto an economically solid ground. The Board has hired the international aviation consultancy Knighthood Global, tasked to restructure the company’s business,” said the chairman of the Supervisory Board.
The contract with the international consultancy is signed for a period of up to six months, during which all operations and cost structure of the company will be revised, noted David O’Brock.
According to the chairman of the Supervisory Board, an additional reason for the current status of the company, besides unfavorable external conditions, is an overly optimistic expansion strategy adopted late last year, which in turn has negatively affected the financial situation of the airline.
“The Board expects the turnaround team that started on August 1, to make detailed suggestions for turning the company onto the path of profitability in the nearest future, latest by the end of September. We expect tangible results, including constantly positive cash flow, already in the coming months,” said David O’Brock.
On Thursday, July 27, Estonia’s climate minister Kristen Michal acting in the role of shareholder’s meeting of Nordic Aviation Group, instructed the Supervisory Board to conduct a special inspection to assess the company’s actions and reasons behind the current situation. Nordica’s aim is to find a partner who’s conducting the special inspection by the end of August, an interim report of the inspection is expected by the end of September at the latest.
Last week, the CEO of Nordic Aviation Group Jan Palmér submitted a letter of resignation to the Supervisory Board. The Board approved the resignation of the CEO on July 26.
The Board has appointed Remco Althuis, the lead of the turnaround consultancy team, as the company’s new interim CEO. Althuis has previously worked in managerial positions in KLM, Etihad Airways and Air Seychelles.