EU orders Estonian Air to pay back 85 mln euros in subsidy

The European Union (EU) on Saturday demanded Estonia's state-run airline company to return 85 million euros (91 million U.S. dollars) as a result of being unlawfully subsidized from the government and violating the EU state aid rules.

Following an in-depth investigation, the European Commission, the EU's executive branch, has concluded that the aid measures Estonia gave Estonian Air offered an "undue advantage" in competition, it said in a statement.

As the airline's biggest shareholder, Estonia piggybacked the unit with "at least three" public subsidy measures between 2010 and 2014 with another capital injection still on the way, which was clearly against the EU's one-time aid principle, the statement said.

Meanwhile, Estonian Air has for years been losing money and dashed the hope that it could achieve the reconstruction goal.

"Estonian Air has repeatedly received public subsidies over the past five years but did not carry out the necessary restructuring to become viable as a business," said Margrethe Vestager, the EU competition commissioner.

"It would not be a good use of taxpayer money to keep Estonian Air in the market artificially," Vestager added.

Estonian Air therefore was ruled to pay back the state aid already received, which amounts to about 85 million euros plus interest, and can not receive an additional 40 million euros of restructuring aid, the commission said.

The airline said on its website that it will stop flying from Sunday. Endit