On August 1, Nordic Aviation Group (Nordica), an aviation company, began its journey towards financial recovery by enlisting the expertise of an international consultancy firm.
The company has been facing significant economic challenges over the past few months, with revenues falling below expectations and costs soaring higher.
To navigate through these difficulties, the company’s Supervisory Board made the strategic decision to seek external guidance from Knighthood Global, a renowned aviation consultancy, to restructure and solidify Nordica’s business operations.
Challenging conditions in aviation market
Nordica’s financial struggles have been exacerbated by the challenging conditions prevailing in the aviation market.
Delays in leased aircraft, equipment shortages, and a scarcity of skilled workforce have all contributed to the company’s current state of loss.
Additionally, the rising costs of various inputs have put further strain on the company’s profitability.
As per preliminary data, the consolidated revenue of Nordic Aviation Group (including XFly) for the first half of 2023 amounted to 54.9 million euros. Unfortunately, during the same period, the company incurred losses amounting to 7.2 million euros.
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International aviation expertise
In an effort to secure the company’s sustainability and financial stability, the Supervisory Board, in collaboration with the Shareholder, decided to engage Knighthood Global for a period of up to six months.
During this time, the consultancy will conduct a comprehensive review of Nordica’s operations and cost structure with the ultimate goal of restructuring the company’s business.
Consequences of an optimistic expansion strategy
The current challenging situation also stems from an overly optimistic expansion strategy adopted by Nordica late last year. Unfortunately, this strategy has had adverse effects on the airline’s financial standing.
However, with the assistance of the turnaround team from Knighthood Global, the Board hopes to receive detailed recommendations for achieving profitability by the end of September, if not sooner.
Special Inspection requested
As a means of gaining insight into the actions and underlying reasons behind the current state of the company, Estonia’s climate minister Kristen Michal, acting as the shareholder, has instructed the Supervisory Board to conduct a special inspection.
This inspection aims to identify any areas that require improvement and to understand the causes that led to the current situation. Nordica plans to appoint a partner to conduct the special inspection by the end of August, with an interim report expected by the end of September.
A change in leadership
In light of the challenges faced by Nordica, the CEO, Jan Palmér, has resigned, and the Board has approved his resignation.
To steer the company during this critical phase, the Board has appointed Remco Althuis, the lead of the turnaround consultancy team from Knighthood Global, as the interim CEO.
With an impressive track record in managerial roles at KLM, Etihad Airways, and Air Seychelles, Althuis brings valuable expertise to guide Nordica through its turnaround process.
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