Nordica dumps Adria Airways for LOT

LOT Polish Airlines will buy 49% of Regional Jet, a subsidiary of Nordica, in exchange for a long-term wet leasing agreement with the Estonian airline (Photo by Nordica) LOT Polish Airlines will buy 49% of Regional Jet, a subsidiary of Nordica, in exchange for a long-term wet leasing agreement with the Estonian airline (Photo by Nordica)

Estonian carrier Nordica will suspend its partnership with Slovenian Adria Airways, its first partner, which helped it launch operations. Instead of extending agreement with Adria, Nordica has opted to start a new partnership with LOT Polish Airlines.

The agreement between Nordica and Adria Airways expires on November 19. Neither of the carriers offered explanation as to why it would not be extended.

As a contribution to the new partnership LOT will acquire 49% of shares of Regional Jet, Nordica’s subsidiary, which is the actual operator of Nordica’s aircraft. This step speaks of the partners’ determination to establish long-term relationship, Nordica says in a statement. Within this partnership Nordica will operate flights in the interests of LOT, basically exercising the wet leasing scheme.

In its turn LOT revealed that investment into Regional Jet will give it access to Nordica’s regional fleet of Bombardier CRJ700/900. On the initial stage LOT will be able to use two (and later on, three) aircraft of the type, which will operate flights from Warsaw under LOT’s code. Warsaw to Stockholm will be one of the first such flights. Experts believe that co-operation with the Estonian airline is LOT’s opportunity to strengthen its positions in the Baltic region.

LOT Polish Airlines in its turn emphasized that its current schedule offers a lot of synergies with Nordica’s. The CRJ900s will allow more operational flexibility and hence, more efficient cost management.

“For instance, an aircraft operating a flight from Warsaw to Stockholm won’t have to stay in Stockholm over night. Instead, it can make another flight to its base airport in Tallinn. This saves operational costs and also crew accommodation costs,” a LOT spokesperson commented.

The two airlines’ strategic partnership also implies a common commercial platform and distribution system. Flights will be operated under a common code.

The partnership is expected to streamline air travel market consolidation in Central and Eastern Europe by building up Warsaw’s transit capabilities.

Nordica’s preference of LOT over Adria might be explained by the Polish carrier’s size and strong market positions in Central and Eastern Europe. Its financial standing is also more favorable compared to Slovenian airline. In 2016 LOT underwent a restructuring process and opened 25 new routes. Nordica hopes that through partnership with a stronger carrier it will “make its commercial model more viable and its financial standing and reliability, more stable.”

Those passengers who hold Nordica’s tickets will not be affected by the change of the partners. Their tickets for flights from November 19 will be replaced with LOT’s.

Adria Airways is in the least beneficial situation, even more so since the change of plans is happening during the winter season. However the airline has recently got a new major shareholder, 4K Invest company, which announced intentions to turn the carrier around.

Nordica (Nordic Aviation Group AS; 100% owned by Estonian government), was founded in the fall of 2015 and received its air operator certificate in February this year.

The airline operates flights from Tallinn to 15 destinations in Europe. In the first ten months of this year over  307,600 passengers chose Nordica for their travel needs. LOT is also controlled by its state. It operates in average 200 daily flights to 60 destinations around the world carrying about 5 million passengers per year.

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