Nordica subsidiary Regional Jet reported a loss of close to EUR 6.5 million in 2020, a yearm which blighted the aviation sector as a whole with the arrival of the pandemic, as Regional Jet reported a 34% fall in turnover over the same period.
Jan Palmer, board chair and CEO, said the timing of the pandemic’s start last year, coming as it did shortly before the start of the summer season, could not have been worse.
He said: “While it is still difficult to predict the future, we are absolutely confident that we can grow our outsourced airline service business in Europe. This is possible for a simple reason – our customers’ cost base and the complexity of their business will decrease as the operation of narrow-body and long-haul aircraft is their own core business”.
Regional Jet, which operates under the Xfly brand, operates routes for other airlines, including domestic lines in Sweden, via a wet-leasing model.
Regional Jet’s sales revenue also fell from EUR 85.8 million in 2019 to EUR 56.7 million last year, though the company did finish the year in the black, with a net profit of EUR 598,000.
Palmer said that growth was planned for 2020, but it had to be put on hold with the arrival of the coronavirus, including via new long-term contracts with SAS and LOT.
“We were ready to operate a fleet of 24 aircraft and had increased our staff to 600 people. Our number of flights was to increase by 30%, from 3,500 to 4,500 per month,” he said, adding that the crisis meant that around half the company staff had to be laid off.
“At that moment, no one understood the full impact of the pandemic, but it was clear that the situation was very serious and that no recovery was expected in the near future. As a result, we immediately decided to respond to this as a worst case scenario and laid off 50% of our staff,” he went on.
As of the end of 2020, Regional Jet’s parent owner, Nordic Aviation Group AS, had to boost its subsidiary’s equity capital, by EUR 6 million, taken from the EUR 30-million state aid.
Polish airline LOT also sold its 49% stake to Nordica, making the latter the sole owner, in a deal concluded in the final days of 2020.
The company made its best of the downtime, however, Palmer said, by developing its internal procedures and services and, even more significantly by developing line maintenance services for their aircraft.
This reduces costs and increases the focus on the company’s fleet, the company says, and, according to Palmer, in the future the company will be able to provide the same for other airlines, especially in Stockholm, Copenhagen and Tallinn.
Prior to the pandemic, the airline had acquired five E195 and two E190 regional aircraft for LOT operations, and hired and trained flight crews in both Tallinn and Vilnius, while it also signed a new contract with SAS for the addition of five CRJ900 regional aircraft, based in Tallinn, Vilnius and Palanga.
LOT and SAS canceled these deals once the coronavirus arrived, however, making the only remaining flights available being those between Gallivare and Arvidsjaur, in Sweden, and that country’s capital, Stockholm, operated twice-weekly under a Swedish procurement contract in cooperation.
As of the end of 2020, Regional Jet had 24 aircraft under operating leases.
Regional Jet operated more than 12,700 flights in 2020, 69% of them for SAS, 9% for Nordica and 20% for LOT.
In 2019, it operated more than 35,000 flights. (ERR/Business World Magazine)
