Embattled Estonian Air slashes staff by half

State-controlled carrier Estonian Air announced Tuesday that it would slash its staff numbers by half, as the aviation minnow battles to cut its losses.

"The workforce reduction will be applied to all structural units of Estonian Air," its new chief executive Jan Palmer said in a statement.

The airline said that the number of its employees would be cut from 318 to 146.

"Noticeable cutbacks in the flight volumes unfortunately lead to operating with a smaller number of employees," said Palmer, who took the helm on November 1.

"The structure of the company will be based on operating five aircraft and serving nine to 10 core destinations," he added.

Currently, Estonian Air operates a 10-plane fleet.

Created in 1991, the year the Baltic republic of 1.3 million regained its independence from the Soviet Union, the airline has had mixed fortunes.

It was privatised in 1996, and from 2003 to 2010 was almost evenly split between the state, which owned 51 percent, and Scandinavian carrier SAS, with 49 percent.

Since then, the state has gradually upped its holding to the current 97 percent.

In November 2011 the government announced that it was injecting 30 million euros ($38 million) to renew Estonian Air's fleet and bolster business, with the long-term goal of seeking a new strategic investor.

In the first nine months of this year, Estonian Air operated a total of 14,964 flights, or 72 percent more than in the same period of 2011.

The drive to boost passenger figures by offering more connections via Estonia appeared to have borne fruit, with numbers over the same period rising by 71 percent to 686,106.

But the airline failed to plug the hole in its coffers, even though revenues in the first nine months of 2012 reached 70.4 million euros, compared with 58.7 million euros in the same period of 2011.

Nine-month losses hit 20.2 million euros, up from 11.2 million euros in the first three quarters of 2011.

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