Eesti Päevaleht writes that Estonian Air has issued a guarantee for the amount of USD 60m in connection with the purchase of Bombardier aircraft.
Namely, when Estonian Air acquired three aircraft from Canadian aircraft maker Bombardier, its shareholders decided to set up a legal body EA Jet Leasing Ltd incorporated on Cayman islands that was to be the key in the scheme of financing the purchase of three Bombardier aircraft with the help of Export Development Canada or EDC.
According to the Estonian Air’s annual accounts, EA Jet Leasing is owned by Estonian Air, but fully controlled by EDC.
EA Jet Leasing owns the three Bombardier aircraft and is leasing them to Estonian Air. Three leasing contracts were signed with EA Jet Leasing Ltd for 12 years. In addition, Estonian Air signed a guarantee to secure the liabilities of EA Jet Leasing Ltd in the amount of USD 60m for the benefit of EDC.
This means that Estonian Air has not only leasing liabilities that are fairly easy to be transferred to a new owner in case the airline wishes to give the aircraft to another company, but it also has a potential liability in the amount of USD 60m.
If the state should decide to liquidate Estonian Air, the company would have to return the three Bombardier aircraft to EA Jet Leasing which in can theoretically exercise its guarantee against Estonian Air.
Toomas Hõbemägi
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