Official Journal L 174. of the European Union. Legislation. Non-legislative acts. Volume June English edition. Contents DECISIONS

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1 Officil Journl of the Europen Union L 174 English edition Legisltion Volume June 2016 Contents II Non-legisltive cts DECISIONS Commission Decision (EU) 2016/1031 of 6 Novemer 2015 on the mesures SA (13/C) (ex 13/NN) (ex 12/N) implemented y Estoni for AS Estonin Air nd on the mesures SA (14/C) (ex 13/N) which Estoni is plnning to implement for AS Estonin Air (notified under document C(2015) 7470) ( 1 ) Commission Implementing Decision (EU) 2016/1032 of 13 June 2016 estlishing est ville techniques (BAT) conclusions, under Directive 2010/75/EU of the Europen Prliment nd of the Council, for the non-ferrous metls industries (notified under document C(2016) 3563) ( 1 ) ( 1 ) Text with EEA relevnce EN Acts whose titles re printed in light type re those relting to dy-to-dy mngement of griculturl mtters, nd re generlly vlid for limited period. The titles of ll other cts re printed in old type nd preceded y n sterisk.

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3 Officil Journl of the Europen Union L 174/1 II (Non-legisltive cts) DECISIONS COMMISSION DECISION (EU) 2016/1031 of 6 Novemer 2015 on the mesures SA (13/C) (ex 13/NN) (ex 12/N) implemented y Estoni for AS Estonin Air nd on the mesures SA (14/C) (ex 13/N) which Estoni is plnning to implement for AS Estonin Air (notified under document C(2015) 7470) (Only the English text is uthentic) (Text with EEA relevnce) THE EUROPEAN COMMISSION, Hving regrd to the Trety on the Functioning of the Europen Union, nd in prticulr the first suprgrph of Article 108(2) thereof, Hving regrd to the Agreement on the Europen Economic Are, nd in prticulr Article 62(1)(), Hving regrd to the decisions y which the Commission decided to initite the procedure lid down in Article 108(2) of the Trety, in respect of the id SA (13/C) (ex 13/NN) (ex 12/N) ( 1 ) nd in respect of the id SA (14/C) (ex 13/N) ( 2 ), Hving clled on interested prties to sumit their comments pursunt to the provisions cited ove nd hving regrd to their comments, Wheres: 1. PROCEDURE 1.1. The rescue cse (SA.35956) (1) By letter dted 3 Decemer 2012, Estoni notified the Commission of its plns to provide rescue id in fvour of AS Estonin Air ( Estonin Air or the irline ) s well s of severl cpitl injections crried out in the pst. A meeting with the Estonin uthorities took plce on 4 Decemer (2) Following those pre-notifiction contcts, y SANI notifiction numer 7853 of 20 Decemer 2012, Estoni notified to the Commission the plnned provision of rescue id to the irline in the form of lon fcility mounting to EUR 8,3 million. (3) On the sis of the informtion provided y the Estonin uthorities, it ppered tht the first trnche of the rescue lon ws disursed to Estonin Air on 20 Decemer For this reson, the Commission registered the cse s non-notified id (13/NN) nd informed Estoni of the reclssifiction of the cse y letter of 10 Jnury Furthermore, the Commission requested dditionl informtion y letter of 10 Jnury 2013, to which Estoni replied y letter of 21 Jnury ( 1 ) OJ C 150, , p. 3 nd 14. ( 2 ) OJ C 141, , p. 47.

4 L 174/2 Officil Journl of the Europen Union (4) By letter dted 20 Ferury 2013, the Commission informed Estoni tht it hd decided to initite the procedure lid down in Article 108(2) of the Trety in respect of the rescue id mounting to EUR 8,3 million nd the mesures grnted in the pst. (5) By letter dted 4 Mrch 2013, Estoni informed the Commission of its decision of 28 Ferury 2013 to increse the rescue lon grnted to Estonin Air y EUR 28,7 million. By letter dted 16 April 2013, the Commission informed Estoni tht it hd decided to extend the procedure lid down in Article 108(2) of the Trety to the dditionl rescue id (jointly with the decision referred to in recitl 4, the rescue id opening decisions ). (6) Estoni sumitted comments on the rescue id opening decisions y letters dted 9 April nd 17 My The Commission requested dditionl informtion from Estoni y letter of 8 April 2013, which Estoni replied to on 18 April (7) The rescue id opening decisions were pulished in the Officil Journl of the Europen Union on 29 My 2013 ( 3 ). The Commission invited interested prties to sumit comments on the mesures. The Commission received comments from two interested prties, nmely Interntionl Airlines Group ( IAG ) nd Rynir. The Commission forwrded them to Estoni, which ws given the opportunity to rect; Estoni s oservtions were received on 5 August The restructuring cse (SA.36868) (8) Following informl contcts with the Commission, Estoni notified restructuring pln including recpitlistion of the irline mounting to EUR 40,7 million on 20 June 2013, y SANI notifiction numer The notifiction ws registered with numer SA (13/N). (9) The Commission requested dditionl informtion y letters dted 16 July nd 28 Octoer 2013, to which the Estonin uthorities replied y letters dted 28 August nd 25 Novemer Estoni sumitted dditionl informtion y e-mil of 22 Decemer (10) In ddition, the Commission received complint from Rynir dted 23 My 2013 concerning Estoni s plns to increse the cpitl of Estonin Air s well s sle-nd-lese-ck greement etween Estonin Air nd Tllinn Airport regrding n office uilding owned y Estonin Air. On 25 June 2013, the Commission forwrded the complint to Estoni. Estoni s comments were sumitted y letter dted 5 August 2013 ( 4 ). (11) By letter dted 4 Ferury 2014, the Commission informed Estoni tht it hd decided to initite the procedure lid down in Article 108(2) of the Trety in respect of the notified restructuring id ( the restructuring id opening decision ) ( 5 ). (12) Estoni sumitted comments on the restructuring id opening decision y letter dted 19 Mrch A meeting with the Estonin uthorities nd Estonin Air took plce on 7 My 2014, followed y telephone conference on 30 June In ddition, meeting with the Estonin uthorities nd their legl representtive took plce on 28 August 2014, fter which Estoni provided dditionl informtion y e-mil on 10 Septemer (13) On 31 Octoer 2014, the Estonin uthorities sumitted modified restructuring pln. Following tht, meetings with the Estonin uthorities were held on 23 Novemer, 11 Decemer nd 19 Decemer 2014 nd dditionl informtion ws sumitted y the Estonin uthorities on 3, 10 nd 19 Decemer (14) Additionl informtion ws sumitted y the Estonin uthorities on 14, 27 nd 28 Jnury, 13 Ferury, 11 Mrch, 8 nd 30 April, 27 My, 17 July nd 26 August In ddition, meetings with the Estonin uthorities were held on 14 nd 15 Jnury, 27 Mrch, 21 April (telephone conference), 7 My (telephone conference), 28 My nd 15 Septemer ( 3 ) See footnote 1. ( 4 ) Given tht the complint ws sumitted on 23 My 2013, efore Estoni notified Estonin Air s restructuring pln on 20 June 2013, the complint ws registered under the rescue cse, i.e. SA However, given tht the complint prtly relted to the plns of the Estonin uthorities to recpitlise the irline, it ws ssessed in the context of the opening decision on the restructuring cse, i.e. SA ( 5 ) The restructuring id opening decision ws corrected y Commission decision C(2014) 2316 finl of 2 April 2014.

5 Officil Journl of the Europen Union L 174/3 (15) The restructuring id opening decision ws pulished in the Officil Journl of the Europen Union on 9 My 2014 ( 6 ). The Commission invited interested prties to sumit their comments on the mesures. The Commission received comments from two interested prties, nmely Rynir nd n interested prty who does not wish its identity to e disclosed. The Commission forwrded them to Estoni, which ws given the opportunity to rect; Estoni s oservtions were received on 15 August (16) By letter dted 8 Octoer 2015, Estoni informed the Commission tht they exceptionlly ccept tht this Decision e dopted nd notified in English, therey wiving its rights deriving from Article 342 of the Trety in conjunction with Article 3 of Regultion 1 ( 7 ). 2. THE ESTONIAN AIR TRANSPORT MARKET (17) The min irport of Estoni is Tllinn Airport, which in 2013 served 1,96 million pssengers down from 2,21 million pssengers in 2012, tht is to sy, decrese of 11,2 %. In 2013, 13 different irlines performed scheduled flights to nd from Tllinn nd totl of 20 routes were operted ll yer round ( 8 ). In 2014, Tllinn Airport served 2,02 million pssengers, n increse of 3 % compred to In totl 15 different irlines operted 20 routes on yer-round sis ( 9 ). (18) Estonin Air crried 27,6 % of the pssengers flying vi Tllinn in 2013, down from 40,2 % in 2012, lthough it mintined its leder position. Also in 2013, Rynir nd Lufthns crried 15,1 % nd 10,5 %, respectively, of pssengers trvelling to/from Tllinn, closely followed y Finnir nd irbltic ( 10 ). In 2014, Estonin Air s shre of totl pssengers further decresed to 26,6 %, followed y Lufthns with 13,4 % nd Rynir with 11,5 % of the totl pssengers ( 11 ). (19) Due to the stility of the Estonin economy in 2013, pssenger demnd for ir trnsport remined high, which presented other irlines n opportunity to increse their supply nd mrket shre ( 12 ). In 2013, Turkish Airlines strted to operte flights to/from Istnul nd Rynir dded seven new routes, while Lufthns nd irbltic incresed their frequencies. In 2014, new irlines strted operting scheduled routes from Tllinn, such s for exmple TAP Portugl (to/from Lison) nd Vueling (to/from Brcelon) ( 13 ). (20) According to the mnger of Tllinn Airport, the whole of Estoni cn e deemed the ctchment re of this irport. At the sme time, most of Estoni is lso locted within the ctchment re of other interntionl irports such s Helsinki, Rig nd Sint Petersurg ( 14 ). 3. THE BENEFICIARY (21) Estonin Air, stock compny under Estonin lw, is the flg crrier irline of Estoni, sed in Tllinn Airport. Currently, the irline hs round 160 employees nd opertes fleet of seven ircrft. (22) Estonin Air ws formed s Stte-owned compny fter the independence of Estoni in 1991 from division of the Russin irline Aeroflot. After privtistion efforts nd susequent chnges in the irline s shreholding structure, Estonin Air is currently owned y Estoni (97,34 %) nd the SAS Group ( SAS ) (2,66 %). ( 6 ) See footnote 2. ( 7 ) Regultion 1 determining the lnguges to e used y the Europen Economic Community (OJ 17, , p. 385/58). ( 8 ) The other irports in Estoni (Trtu, Pärnu, Kuressre nd Kärdl regionl irports nd Kihnu nd Ruhnu irfields) crried pssengers in In 2013, Trtu ws the only regionl irport in Estoni with scheduled interntionl flight to Helsinki. Source: 2013 nnul report of AS Tllinn Lennujm, mnger of Tllinn Airport, ville t Astrunded/Lennujm%20strmt_2013_ENG.pdf ( 9 ) Source: 2014 nnul report of AS Tllinn Lennujm, mnger of Tllinn Airport, ville t Editor/Ettevote/Lennujm%20strmt_ENG_2014_ pdf ( 10 ) Source: Estonin Air s consolidted nnul report for 2013, ville t ESTONIAN-AIR-ANNUAL-REPORT-2013.pdf ( 11 ) Source: Estonin Air s consolidted nnul report for 2014, ville t Air-Annul-Report-2014-FINAL-Wepge.pdf ( 12 ) Source: 2013 nnul report of AS Tllinn Lennujm, see footnote 8. ( 13 ) Source: we pge of Tllinn Airport ( ( 14 ) See footnote 12.

6 L 174/4 Officil Journl of the Europen Union (23) Estonin Air prticiptes in one joint venture: Eesti Aviokütuse Teenuste AS (51 % shre), which provides refuelling service to ircrfts t Tllinn Airport. Estonin Air lso prticipted in the joint venture AS Amdeus Eesti (60 % shre), which provides Estonin trvel gencies with ooking systems nd support, ut in erly 2014 it sold its stke to Amdeus IT Group, SA ( 15 ). Estonin Air lso hd 100 %-owned susidiry, AS Estonin Air Regionl, which operted commercil flights to neighouring destintions in coopertion with Estonin Air. This susidiry ws sold in June 2013 to Fort Aero BBAA OÜ, privte jet opertor ( 16 ). (24) Estonin Air hs mde hevy losses since More thn hlf of the irline s equity disppered etween 2010 nd In tht period, the irline lost more thn one qurter of its cpitl. (25) Despite cpitl injections in 2011 nd 2012, the irline s finncil sitution continued to deteriorte in In My 2012, monthly loss of EUR 3,7 million ws incurred, ove the udgeted loss of EUR 0,9 million. By the first hlf of 2012, the losses of Estonin Air hd reched EUR 14,9 million ( 17 ). In June 2012, Estonin Air revised its forecst for 2012 nd estimted EUR 25 million in opertionl losses for the yer (the originl udget forecsted n nnul loss of EUR 8,8 million). By the end of July 2012, Estonin Air hd reched stte of technicl nkruptcy under Estonin lw. In the finncil yer 2012, the irline mde loss of EUR 49,2 million. (26) The net loss of Estonin Air in 2013 mounted to EUR 8,1 million ( 18 ). In 2014, its net loss reched EUR 10,4 million ( 19 ). 4. DESCRIPTION OF THE MEASURES AND THE RESTRUCTURING PLAN (27) This section provides description of the mesures under ssessment oth s regrds the rescue cse (SA.35956), tht is to sy, mesures 1 to 5, nd the restructuring pln notified under the restructuring cse (SA.36868) The 2009 cpitl increse (mesure 1) (28) Tllinn Airport nd the irline were single compny until 1993, when the irline ecme n independent entity. In 1996, Estoni privtised 66 % of the shres of the irline. After privtistion, the shres were held s follows: 49 % y Mersk Air, 34 % y the Ministry of Economic Affirs nd Communictions of Estoni, nd 17 % y Cresco Investment Bnk ( Cresco ), locl investment nk. In 2003, SAS ought the 49 % stke of Mersk Air, while the other shreholdings remined the sme. (29) According to the informtion provided y Estoni, the irline sought new cpitl from its shreholders in 2009 for two min resons. First, t the eginning of 2008, Estonin Air mde down pyment in csh of EUR [ ] (*) million to cquire three new Bomrdier regionl jets in order to upgrde the fleet to more efficient ircrft. Secondly, the usiness model did not work under the stress of the finncil crisis nd the irline fced liquidity prolems t the end of the yer. (30) In Ferury 2009 ll the shreholders incresed the irline s cpitl y EUR 7,28 million in proportion to their shreholdings. Estoni injected in csh EUR 2,48 million, while Cresco provided EUR 1,23 million lso in csh. SAS injected totl of EUR 3,57 million, of which EUR 1,21 million in csh nd EUR 2,36 million in the form of lon-to-equity conversion. The shreholding structure of Estonin Air did not chnge s result of mesure The sle of the ground hndling section in 2009 (mesure 2) (31) In June 2009, Estonin Air sold its ground hndling usiness to the Stte-owned Tllinn Airport t price of EUR 2,4 million. At the time of the sle, Tllinn Airport ws 100 % owned y Estoni. ( 15 ) See ( 16 ) See At the time of the sle, AS Estonin Air Regionl ws dormnt nd hd no ircrft, no employees, nd no ssets. ( 17 ) Source: Estonin Air s review of performnce for the first hlf of 2012, ville t 04/ENG-1H-2012.pdf ( 18 ) See footnote 10. ( 19 ) See footnote 11. (*) Business secret

7 Officil Journl of the Europen Union L 174/5 (32) The Estonin uthorities explined tht no open, trnsprent nd unconditionl tender took plce. Also, the sle price ws not sed on n expert opinion ut it ws sed on the ook vlue of the ssets for sle. Deprecited ssets were tken into ccount y dding vlue. According to the Estonin uthorities, the price ws estlished in direct negotitions etween Tllinn Airport nd Estonin Air The 2010 cpitl injection (mesure 3) (33) On 10 Novemer 2010, Estoni injected EUR 17,9 million (EEK 280 million) in csh into the cpitl of Estonin Air while SAS crried out lon-to-equity conversion for n mount of EUR 2 million. At the sme time, SAS cquired Cresco s 17 % stke in the irline in exchnge for EUR [ ] lon write-off tht Cresco held with SAS nd thus Cresco cesed to e shreholder. (34) The decision to cquire the mjority ownership of the irline ws sed on usiness pln dting from 2010 ( the 2010 usiness pln ). At the sme time, Estoni wnted to ensure long-term flight connections etween Tllinn nd the most importnt usiness destintions nd sw gining control of the irline through cpitl injection s the est wy to rech this ojective. (35) The cpitl ws pprently used for pre-pyments of USD [ ] million for three Bomrdier CRJ900 ircrft which were delivered in 2011, s well s to cover prt of the net loss in 2011 mounting to EUR 17,3 million. (36) As result of the 2010 cpitl injection, Estoni ecme mjority owner with 90 % of the shres of Estonin Air, while SAS s prticiption ws diluted to 10 %. As indicted in recitl 33, Cresco which held 17 % of the shres of Estonin Air since the irline s privtistion in 1996 cesed to e shreholder nd decided not to inject more money into the irline ( 20 ) The 2011/2012 cpitl increse (mesure 4) (37) In Novemer 2011, Estoni decided to inject EUR 30 million in cpitl into Estonin Air nd to increse its stke to 97,34 %. The cpitl injection ws crried out in two trnches of EUR 15 million ech, one on 20 Decemer 2011 nd the other on 6 Mrch SAS did not prticipte to this cpitl injection nd its shreholding ws diluted from 10 % to 2,66 %. Since then, the shreholding structure of Estonin Air hs not chnged. (38) The cpitl injection ws pprently crried out on the sis of usiness pln dted Octoer 2011 ( the 2011 usiness pln ). The 2011 usiness pln ws sed on the ssumption tht igger network nd more frequencies would improve the irline s competitiveness. It ws considered tht good hu structure (hu-nd-spoke network) would ttrct pssengers nd llow flexiility to rellocte trffic through hu to counter sesonlity or sudden chnges in demnd. In ddition, the hu volumes were considered to llow the lowering of set cost y utilising igger ircrft. The regionl network model ws considered to llow the irline to grow in size nd reduce risks. The 2011 usiness pln lso implied n increse of connections to nd from Estoni, of the fleet nd consequently n increse of stff to hndle more round trips. (39) According to the 2011 usiness pln, Estonin Air would require EUR 30 million from its shreholders nd lon from the privte nk [ ]. Although the Estonin rnch of the nk llegedly pproved the lon through its credit committee, the lon ws in the end refused y the highest credit committee of [ ] in Novemer Notwithstnding this refusl, Estoni decided to provide EUR 30 million to Estonin Air Rescue lon fcility (mesure 5) (40) In view of the d mid-2012 results of Estonin Air (losses of EUR 14,9 million), it ecme cler to the mngement of the irline tht the hu-nd-spoke strtegy of the 2011 usiness pln hd not succeeded. In this context, Estoni decided to provide dditionl support to the irline in the form of rescue id. ( 20 ) See Bltic Reports of 7 June 2010, Government sets ilout del for Estonin Air,

8 L 174/6 Officil Journl of the Europen Union (41) The rescue mesure consisted of lon mounting to EUR 8,3 million provided y the Ministry of Finnce of Estoni with n nnul interest rte of 15 %. A first instlment of the lon of EUR ws lredy disursed on 20 Decemer 2012, the second instlment of EUR on 18 Jnury 2013 nd the remining EUR on 11 Ferury 2013 ( 21 ). Estoni committed to communicte to the Commission restructuring pln or liquidtion pln or proof tht the lon hd een reimursed in full not lter thn six months fter the first implementtion of the rescue id mesure, nmely y 20 June (42) On 4 Mrch 2013, the Estonin uthorities informed the Commission of their decision dted 28 Ferury 2013 to increse the rescue lon fcility y EUR 28,7 million on the sis of request of Estonin Air setting out its liquidity needs. Of tht mount, EUR 16,6 million were grnted to the irline on 5 Mrch 2013 fter signing n mendment to the previous lon greement, while the remining EUR 12,1 million of the rescue id fcility were provided to Estonin Air on 28 Novemer 2014 ( 22 ). The terms of the dditionl rescue lon were the sme s those of the originl rescue lon, nmely the lon hd to e originlly reimursed t the ltest y 20 June 2013 (reimursement ws then postponed following the notifiction of the restructuring cse) nd n interest of 15 % p.. would e chrged. (43) The totl mount of the rescue lon fcility ws thus of EUR 37 million nd it hs een ll dischrged to Estonin Air in severl trnches s descried in recitls 40 nd 41. (44) On 5 Decemer 2013, t the request of Estonin Air, Estoni decided to lower the interest rte of the rescue lon from the initil 15 % to 7,06 % s from July According to the Estonin uthorities, the reson for this decision ws tht the irline s risk profile hd chnged since the rte ws set in Decemer The notified restructuring id nd the restructuring pln (mesure 6) (45) On 20 June 2013, Estoni notified restructuring id of EUR 40,7 million to Estonin Air in the form of n equity injection, on the sis of restructuring pln ( the restructuring pln ) covering five-yer restructuring period from 2013 to Return to viility y 2016 (46) The restructuring pln ims t restoring Estonin Air s long-term viility y The restructuring pln ssumes tht it will e possile to turn round the existing level of losses from ernings efore txes ( EBT ) of EUR 49,2 million in 2012 to rek-even level y 2015 nd to profitility y According to the restructuring pln s ssumptions, Estonin Air will generte EBT of EUR 1,3 million y Tle 1 Profit nd loss (in EUR million) (f) 2014(f) 2015(f) 2016(f) 2017(f) Revenues 62,759 68,583 76,514 91,508 71,884 73,587 76,584 78,790 80,490 EBITDA ( 1 ) 2,722 3,181 (6,830) (10,037) 6,510 8,454 9,918 10,000 10,813 EBT (4,434) (2,617) (17,325) (49,218) (7,052) (1,577) (0,002) 1,296 2,031 EBT mrgin (7 %) (4 %) (23 %) (54 %) (10 %) (2 %) (0 %) 2 % 3 % Totl equity 7,931 ( 2 ) 23,958 36,838 (14,683) 18,964 17,387 17,385 18,681 20,712 ( 1 ) Ernings efore interest, txes, deprecition nd mortistion. ( 2 ) Exchnge rte EUR 1 = EEK 15,65. (47) Concerning profitility, the restructuring pln ims t chieving return on cpitl employed ( ROCE ) of 6,2 % nd return on equity ( ROE ) of 6,9 % y 2016, nd of 9,8 % nd 8,9 % respectively y ( 21 ) See lso ( 22 ) See Estonin Air s consolidted nnul report for 2014, ville t Annul-Report-2014-FINAL-Wepge.pdf s well s press rticle Estonin government pproves of lst lon pyment to Estonin Air of 20 Novemer 2014:

9 Officil Journl of the Europen Union L 174/7 Tle 2 Forecsted ROE nd ROCE (%) ROE (37,2) (9,1) (0,0) 6,9 9,8 ROCE (6,6) 0,8 7,1 6,2 8, Restructuring mesures (48) To chieve those results, the restructuring pln envisges numer of key ctions. For instnce, Estonin Air decreses the size of its fleet, pssing from 11 ircrft in Decemer 2012 to 7 plnes s of August The irline lso rtionlises the fleet: from the initil ircrft mix (including four Emrer E170, three Bomrdier CRJ900, three S 340 nd one Boeing 737), Estonin Air ims t hving single- type fleet of seven CRJ900 y the end of Of these seven ircrft, five would e used to serve the irline s route network nd the remining two would e wet-lesed or chrtered. (49) Estonin Air hs downsized its route network, pssing from 24 routes ville in 2012 to 12 routes, of which two re sesonl ( 23 ). The irline thus discontinued 12 routes, which re designted s compenstory mesures (see Tle 4). The downsizing of the route network entils cpcity reduction of 37 % in terms of ASK ( 24 ) nd 35 % in terms of sets offered (in 2013 figures compred to 2012). Furthermore, Estonin Air reduced y 23 % the ASK in those routes mintined s core. (50) Estonin Air hs lredy reduced its hedcount from 337 employees in April 2012 to 197 in Mrch 2013 nd round 160 t present, eyond the originl pln to reduce stff down to 164 employees. Furthermore, Estonin Air sold to Tllinn Airport n office uilding nd hngr. (51) According to the restructuring pln, Estonin Air lso plns to implement new pricing model (fewer ooking clsses/price groups nd fre regultions, s well s product disggregtion imed t generting higher levels of ncillry income) nd numer of mesures to improve the qulity of its services, including the chnnels through which they re sold. In prticulr, Estonin Air intends to increse the revenues resulting from mrketing cmpigns minly through digitl chnnels from EUR [ thousnd] in 2013 to EUR [1,5-2,5] million in Also, the new online service fee will increse revenues from EUR [ thousnd] in 2013 to EUR [1-2] million in Those mesures should increse revenues y EUR [10-20] million in the next five yers. (52) In ddition, ccording to the restructuring pln, Estonin Air plns to implement numer of mesures to reduce costs, including the signing of collective greement regrding py scle increses, vction nd pilot utilistion; the introduction of multifunctionl employee concept, especilly in ck office stff; incresed fuel efficiency vi improved flight opertions, including reduced tke off power nd fine tuning, reduced distriution nd commission costs; efficiencies from the single type fleet; nd contrctul renegotitions such s ground hndling, ctering nd irport chrges. Those mesures should yield EUR [20-30] million in the next five yers. (53) Furthermore, the restructuring pln envisges the reorgnistion of the irline s senior mngement tem Compenstory mesures (54) As prt of its restructuring, Estonin Air discontinued totl of 12 routes, which re designted s compenstory mesures. The restructuring pln lso highlights tht the slots given up in London Gtwick (LGW), Helsinki (HEL) nd Vienn (VIE) should e counted s compenstory mesures since these re coordinted (cpcity constrined) irports. ( 23 ) The restructuring pln mintins the following 10 core routes: Amsterdm (AMS), Stockholm (ARN), Brussels (BRU), Copenhgen (CPH), Kiev (KBP), Sint Petersurg (LED), Oslo (OSL), Moscow Sheremetyevo (SVO), Trondheim (TRD) nd Vilnius (VNO). The sesonl routes re Pris Chrles de Gulle (CDG) nd Nice (NCE). However, it ppers from press rticles nd pulic sttements of Estonin Air tht Estonin Air hs operted nd intends to operte in the future sesonl routes eyond the ones contined in the restructuring pln, nmely Munich (MUC), Split (SPU) nd Berlin (TXL). It lso ppers tht s from 2015, Estonin Air intends to dd Miln (MXP) to its offers of sesonl routes. ( 24 ) ASK stnds for ville set kilometre (sets flown multiplied y the numer of kilometres flown). ASK is the most importnt cpcity indictor of n irline s employed y the ir trnsport industry nd y the Commission itself in previous restructuring cses in the ir trnsport sector.

10 L 174/8 Officil Journl of the Europen Union Destintion Lod fctor (2012) Tle 3 Routes designted s compenstory mesures Level 1 contriution ( 1 ) (2012) DOC contriution ( 2 ) (2012) Profitility mrgin (2012) (%) Cpcity given up in ASK (% compred to totl cpcity pre-restructuring) Hnnover (HAJ) Helsinki (HEL) Joensuu (JOE) Jyväskylä (JYV) Kjni (KAJ) Rig (RIX) London (LGW) Gtwick Trtu (TAY) Tilisi (TBS) Kuressre (URE) Venice (VCE) Vienn (VIE) ( 1 ) Level 1 contriution mrgin is defined s totl revenue less pssenger-relted vrile costs over totl revenue. ( 2 ) The pln defines DOC contriution s totl revenue less pssenger, round trip nd fuel-relted costs over totl revenue Own contriution (55) According to the restructuring pln the own contriution would consist of EUR 27,8 million from the plnned sle of three ircrft in 2015, EUR 7,5 million from the sle of property, EUR 2 million from the sle of other non-core ssets, nd EUR 0,7 million from new lon to e provided y [ ]. Given the totl restructuring costs of EUR 78,7 million, the own contriution (totlling EUR 38 million) would correspond to 48,3 % of the restructuring costs. The remining prt of the restructuring costs would e funded y restructuring id grnted y Estoni in the mount of EUR 40,7 million in the form of equity, prt of which would e used to repy the rescue lon Risk nd scenrio nlysis (56) The restructuring pln provides scenrio nlysis including, eside the se cse on which the restructuring pln is sed, est cse ( high cse ) nd worst cse ( low cse ) scenrio. On the one hnd, the high cse ssumes n nnul GDP growth in Europe of 5 %, growth in ncillry revenues of EUR 7 million resulting from improved product positioning nd 5 % verge pssenger increse. According to the restructuring pln, the high cse would result in positive EBT lredy in On the other hnd, the low cse is sed on the ssumption tht GDP growth in Europe will continue to e low until 2017 which will led to 12 % decrese in the numer of pssengers. The negtive consequences of the fll in the numer of pssengers would however e mitigted y numer of mngement ctions, nmely 10 % roundtrip frequency reduction, 1 % increse in the price of tickets, n increse in the numer of ncillry revenues from EUR 4,5 per pssenger in 2015 to EUR 6,5 per pssenger in 2017, 10 % reduction in consulting costs nd other deprtment costs, nd further reduction of crew (5 pilots nd 5 cin crew memers etween 2014 nd 2016). Tking into considertion the mitigting mngement ctions, the low cse would result in slightly positive EBT in 2017 ut still led to negtive net csh efore finncing. The restructuring pln clims tht in none of the cses dditionl funding would e needed.

11 Officil Journl of the Europen Union L 174/9 Tle 4 Scenrio nlysis (in EUR million) High cse Low cse EBT [(8)-(7)] [0-1] [3-4] [6-7] [9-10] Net csh efore finncing [(10)-(9)] [7-8] [6-7] [5-6] [8-9] EBT [(8)-(7)] [(4)-(3)] [(3)-(2)] [(1)-0] [0-1] Net csh efore finncing [(10)-(9)] [2-3] [1-2] [(1)-0] [(1)-0] (57) The restructuring pln lso provides sensitivity nlysis upon the se cse which covers selected fctors: 5 % or 10 % decrese in yield trgets, 5 % decrese in the numer of pssengers, 5 % or 10 % increse in fuel costs, 5 % or 10 % decrese in the trget sle price for the ircrft to e sold in 2015 (see recitl 55 ove) nd 5 % pprecition nd deprecition in the USD/EUR exchnge rte. The restructuring pln considers the impct tht ech fctor individully considered would hve on the recovery of the irline nd concludes tht dditionl funding etween EUR [1-10] million nd EUR [30-40] million would e needed in ll cses (except in cse there is 5 % USD/EUR exchnge rte pprecition). In ddition, in most of the cses, rek-even would not e reched y the end of the plnned restructuring period, nmely The modified restructuring pln of 31 Octoer 2014 (58) On 31 Octoer 2014, the Estonin uthorities sumitted sustntilly modified restructuring pln. The modifictions of the pln relte in prticulr to the following: (1) Plnned cquisition of Estonin Air y privte investor, the Estonin investment group Infortr ( 25 ), which is envisged to cquire [ ] % shres from Estoni y [ ] 2015; (2) Extension of the restructuring period from five to more thn six yers, with the strt dte moved ckwrds from 2013 to Novemer 2010 nd the end dte moved from end 2017 to Novemer 2016; (3) A modified usiness pln, tking into ccount privtistion nd envisged synergies with the ferry opertor Tllink, prtly owned y Infortr, s well s dditionl djustments due to recent developments (Ukrine crisis, lower thn expected pssenger numers on some lines due to competition, etc.). (59) By moving ckwrds the strt dte of the restructuring period to Novemer 2010, the modified restructuring pln lso cptures s restructuring id the cpitl injections of 2010 (mesure 3) nd 2011/2012 (mesure 4). The totl restructuring id mount would thus increse from EUR 40,7 million s per the originl restructuring pln to EUR 84,7 million. (60) As result of the extension of the restructuring period nd the plnned entry of privte investor in 2015, the modified restructuring pln covers three distinct usiness strtegies sed on seprte contemporneous usiness plns: (1) 2011-April 2012: Strtegy to expnd nd develop regionl hu-nd-spoke opertor (finnced to lrge prt y the two Stte cpitl injections under mesures 3 nd 4 nd sed on usiness pln prepred y the new mngement ppointed fter the Stte hd cquired 90 % of Estonin Air shres in Novemer 2010), involving mong others: ( 25 ) Infortr is one of the lrgest privte investment groups in Estoni with interests in shipping (including 36 % stke in Tllink, lrge pssenger nd crgo shipping compny ctive in the Bltic Se region), rel estte, finncil services, etc. In 2013, the Infortr group mde net profit of EUR 20 million nd held ssets worth EUR 432 million.

12 L 174/10 Officil Journl of the Europen Union () expnsion of the fleet from 8 to 11 ircrft (plus 2 dditionl on order); () developing Tllinn into regionl hu with significntly incresed numer of routes operted (from 13 in Mrch 2011 to 24 in Septemer 2012); (c) incresed numer of stff from 255 to 337. (2) April : Strtegy to reduce cpcity nd chnge usiness model to point-to-point regionl network crrier, focusing on limited numer of core routes. The mesures included mong others: () reduction of the fleet from 11 to 7 ircrft; () reduction of routes operted from 24 to 12 routes; (c) reduction of the numer of stff from 337 to 164; (d) replcement of the previous CEO nd the mngement tem. (3) : Strtegy providing for the entry of privte investor, synergies with the ferry opertor Tllink nd dditionl djustments tking into ccount weker performnce in 2014: () continue focusing on [5-15] core routes ut increse the numer of sesonl routes from [1-5] to [5-10] y 2016; () supplement the current 7 ircrft with [ ] smll regionl ircrft ATR42s (wet-lesed) to service the dditionl sesonl routes; (c) utilise revenue nd cost synergies with the privte investor nd its susidiries (Tllink ferry, hotels, txi services, etc.). (61) The Estonin uthorities rgue tht despite chnging strtegies, the restructuring period from Novemer 2010 to Novemer 2016, nmely from the cquisition y the Stte of 90 % of the shres of Estonin Air until the irline returns to profitility ccording to the modified restructuring pln, cn e considered s prt of one restructuring continuum with the single gol of mking the irline profitle nd economiclly sustinle. They clim tht it is one long-term process with chnging tctics of how to chieve the desired outcome once it ws found tht the hu-nd-spoke strtegy did not function, it ws ndoned nd replced y different strtegy ut with the sme desired gol of profitility nd sustinility. (62) The modified restructuring pln envisges return to viility y 2016, t the end of the 6-yer restructuring period s shown in Tle 5. Tle 5 Profit nd loss (in EUR million) (f) 2015(f) 2016(f) Revenues 76,514 91,508 72,123 68,463 81,244 97,098 EBITDA (6,830) (10,037) 6,943 5,735 11,907 21,715 EBT (17,325) (49,218) (8,124) (11,417) (3,316) 3,874 EBT mrgin (23 %) (54 %) (11 %) (17 %) (4 %) 4 % Totl equity 36,838 (14,683) (22,808) (32,406) 6,548 10,423

13 Officil Journl of the Europen Union L 174/11 (63) Compred to the originl restructuring pln, the irline should increse its focus on non-core routes nd usinesses (for exmple, dding further sesonl routes or expnding its wet-lese usiness). Further, the irline should tke dvntge of numer of synergies tht it cn develop oth on revenue nd costs side with Tllink. Therefore, the modified restructuring pln envisges much stronger revenue growth in 2015 nd 2016 thn the originl restructuring pln. (64) As regrds own contriution, the modified restructuring pln envisges totl own contriution of EUR [ ] million, representing [50-60] % of the restructuring costs. Tht mount includes prt from the revenues from sset sles nd new [lon, lredy ccounted for in the originlly notified restructuring pln finncing provided in 2010 in equity nd lons y SAS (EUR [ ] million), finncing for the purchse of ircrft otined in 2011 from Export Development Cnd (EDC) nd [ ] (EUR [ ] million), plnned equity contriution y Infortr in 2015 (EUR [ ] million) nd n intr-group credit line to e provided y Infortr in 2015 (EUR [ ] million). (65) The compenstory mesures proposed in the modified restructuring pln include fleet downsizing, discontinution of routes nd resulting mrket shre reduction. Between 2010 nd 2016, the irline would hve reduced its permnent fleet y one ircrft (from eight to seven). Compred to 2012, the reduction in 2016 would e down to four ircrft. Further, etween 2010 nd 2016, the modified restructuring pln envisges n overll reduction of routes from [20-25] to [15-20]. While the irline hs given up eight routes (Athens, Brcelon, Dulin, Rome, Hmurg, London, Berlin nd Kuressre), three routes would e dded (Gothenurg, Split nd Trondheim). Overll, the cpcity flown would remin stle with [ ] million ASKs in 2016 compred to [ ] million ASKs in As regrds mrket shre, the Estonin uthorities rgue tht Estonin Air s mrket shre dropped from 40,2 % in 2012 to 26,3 % in (66) As regrds the entry of privte investor, the modified restructuring pln envisges tht Infortr would not py nything to the Stte for its stke in Estonin Air. Insted, it would provide cpitl injection of EUR [ ] million into Estonin Air (therey cquiring y April 2015 etween [ ] of its shres) plus n dditionl intr-group credit line of EUR [ ] million. Estoni would provide the remining prt of the rescue lon (up to EUR [ ] million) nd then write-off mjority of its lons (up to EUR [ ] million [ ]) nd give up its shreholding y greeing to reduction of the shre cpitl to zero nd then wiving its right to suscrie for the new cpitl increse, while possily retining up to [ ] % of Estonin Air shres. (67) Infortr ws not chosen on the sis of n open, trnsprent nd unconditionl tender ut rther through direct negotitions with Estoni. The Estonin uthorities rgue tht there ws no time to orgnise long tender process nd tht it ctively pproched numer of potentil investors while others lso hd n opportunity to express their interests. Infortr ws the only one to express rel interest cked y contriution to the modified restructuring pln. In ddition, the Estonin uthorities rgue tht the vlue of Estonin Air ws determined y n independent nd reputed expert which concluded tht the totl equity vlue of Estonin Air s of 31 Mrch 2015 from the perspective of potentil privte investor would fll within rnge of EUR [ ] million. 5. THE OPENING DECISIONS 5.1. The rescue id opening decisions (68) On 20 Ferury 2013, the Commission decided to initite the forml investigtion procedure in respect of the mesures grnted in the pst (mesures 1 to 4) nd the rescue lon fcility. On 4 Mrch 2013, the Commission extended the forml investigtion procedure to the increse of the rescue lon fcility. (69) In the rescue id opening decisions, the Commission highlighted tht Estonin Air hs continuously registered significnt losses since In ddition, the Commission noted tht the irline showed some of the usul signs of firm eing in difficulty in the sense of the Community guidelines on Stte id for rescuing nd restructuring firms in difficulty ( 26 ) ( the 2004 R&R Guidelines ) nd tht more thn hlf of the irline s equity disppered etween 2010 nd Also, y the end of July 2012, Estonin Air hd reched stte of technicl nkruptcy under Estonin lw. On this sis, the Commission s preliminry view ws tht Estonin Air qulified s firm in difficulty etween 2009 nd ( 26 ) OJ C 244, , p. 2.

14 L 174/12 Officil Journl of the Europen Union (70) The Commission lso expressed douts s regrds the mesures under ssessment nd cme to the preliminry conclusion tht they entiled incomptile Stte id. In reltion to mesure 1, lthough it ppered tht it hd een crried out on pri pssu terms y the three shreholders of the irline t the time, the Commission oserved tht the new shres were pid in csh nd through lon-to-equity conversion. Since the Commission hd no detiled informtion on which shreholders hd injected fresh money nd which hd ccepted lon-to-equity conversion, the Commission could not exclude the presence of n undue dvntge to Estonin Air nd thus took the preliminry view tht mesure 1 entiled unlwful Stte id. As regrds its comptiility with the internl mrket, the Commission noted tht given the difficulties of the irline, only Article 107(3)(c) of the Trety seemed pplicle. However, the Commission cme to the preliminry view tht this ws not the cse since mesure 1 did not meet severl of the criteri of the 2004 R&R Guidelines. (71) As regrds mesure 2, the Commission oserved tht, t the time of the sle, Tllinn Airport ws 100 % owned y Estoni nd tht it lied within the jurisdiction of the Ministry of Economic Affirs nd Communictions, which seemed to indicte tht the ctions of Tllinn Airport could e deemed imputle to the Stte. In ddition, since no open, trnsprent nd unconditionl tender hd tken plce, the Commission could not utomticlly exclude the presence of n undue dvntge to Estonin Air nd cme to the preliminry view tht mesure 2 entiled unlwful Stte id. It lso preliminrily concluded tht tht id ws incomptile since the criteri of the 2004 R&R Guidelines were not met, including possile rech of the one time, lst time principle. (72) In reltion to mesure 3, the Commission first noted tht it ws not crried out on pri pssu terms. It lso highlighted tht s ws the cse for mesure 2 the contriutions of the Stte nd SAS hd different nture (fresh money from the Stte v conversion of det from SAS) nd were not of comprle mounts. As regrds the 2010 usiness pln, the Commission douted whether it could e regrded s sufficiently sound to conclude tht prudent privte investor would hve entered into the trnsction in question on the sme terms nd lso noted tht Cresco hd pprently disgreed with the pln nd refused to inject dditionl money in the irline. Also, the Commission oserved tht Estoni hd stted tht the decision to increse cpitl in 2010 ws tken in order to ensure the long-term flight connections to the most importnt usiness destintions nd to gin control of the irline. On tht sis, the Commission preliminrily concluded tht mesure 3 entiled unlwful Stte id, which would e not e comptile with the internl mrket since it did not seem to respect the legl requirements of the 2004 R&R Guidelines, including possile rech of the one time, lst time principle. (73) The Commission lso ssessed whether mesure 4 would e in ccordnce with the mrket economy investor principle ( MEIP ). It first rised douts s to whether the 2011 usiness pln ws relile nd whether it ws relistic to consider tht only igger network nd more frequencies, implying cpcity increse in terms of connections, fleet nd stff, would improve the irline s competitiveness. The Commission lso oserved tht the forecst growth prospect of the 2011 usiness pln seemed overoptimistic nd the proposed hu-nd-spoke strtegy ppered extremely risky, something which ppered to e confirmed y the fct tht neither the remining privte shreholder (SAS) nor ny privte creditor ([ ]) ws willing to prticipte in the trnsction. In view of those considertions, the Commission cme to the preliminry view tht mesure 4 entiled unlwful Stte id nd tht it did not meet the criteri set out for rescue or restructuring id under the 2004 R&R Guidelines. (74) Finlly, s regrds the rescue lon fcility (mesure 5), the presence of id ws not disputed y Estoni. The Commission preliminrily noted tht the id seemed to fulfil most of the criteri of Section 3.1 of the 2004 R&R Guidelines concerning rescue id. However, the Commission hd douts s to whether the one time, lst time principle hd een respected in view of the fct tht mesures 1 to 4 could hve entiled unlwful nd incomptile id. Since the Estonin uthorities did not provide ny justifiction llowing for n exception to the one time, lst time principle, the Commission cme to the preliminry view tht mesure 5 could e regrded s unlwful nd incomptile id. (75) For the prt of the rescue lon not een disursed t the time, nmely EUR 12,1 million (see recitls 42 nd 43 ove), the Commission reminded Estoni of the suspensory effect of Article 108(3) of the Trety. It dded tht Estoni should refrin from providing tht mount to Estonin Air until the Commission hd reched finl decision.

15 Officil Journl of the Europen Union L 174/ The restructuring id opening decision (76) On 20 June 2013, Estoni notified restructuring id to Estonin Air of EUR 40,7 million in the form of equity on the sis of the restructuring pln (mesure 6). The Stte-id chrcter of the mesure ws not disputed y Estoni, inter li, given tht the plnned cpitl injection would come directly from the Stte udget nd would exclusively enefit Estonin Air t conditions tht prudent mrket economy investor would normlly not ccept. (77) The Commission then ssessed the comptiility of mesure 6 on the sis of the restructuring id provisions of the 2004 R&R Guidelines. The Commission cme to the preliminry opinion tht Estonin Air would e eligile for restructuring id since it would qulify s firm in difficulty (see recitl 69). (78) The Commission then looked t whether the restructuring pln would llow Estonin Air to restore its long-term viility. The Commission oserved tht the scenrio nlysis nd the sensitivity nlysis of the restructuring pln showed significnt weknesses. In prticulr, it noted tht in the low cse scenrio, Estonin Air would rech slightly positive EBT in However, the net csh efore finncing would remin negtive even fter dditionl restructuring mesures re dopted y the mngement of the irline (see Tle 4). Moreover, the sensitivity nlysis showed tht reltive minor chnges in the ssumptions would result, on stnd-lone sis, in the need for dditionl funding except in one cse. On tht sis, the Commission douted whether the originl restructuring pln provided sound sis for restoring the long-term viility of Estonin Air. (79) As regrds compenstory mesures, the Commission expressed douts concerning the cceptility of the relese of slots in numer of coordinted irports. Additionl informtion on the cpcity-constrined nture of the irports nd economic vlue of the slots ws necessry in order to ssess whether these slots could e ccepted s compenstory mesures. As regrds the discontinution of 12 routes considered s compenstory mesures (see recitl 54 ove), it ws uncler to the Commission how the Level 1 contriution, DOC contriution nd the profitility mrgin of those routes hd een clculted. The Commission noted tht the difference etween those profitility indictors ws very pronounced nd tht it ws uncler whether Estonin Air would hve hd to give up the routes in ny event in order to return to viility. In prticulr, the Commission noted tht ll routes hd negtive profitility mrgin. Also, if the Commission were to use the DOC contriution level to ssess route profitility, only two routes corresponding to cpcity decrese of round 1 % in terms of ASK would hve DOC contriution level ove 0 nd would e cceptle. (80) In reltion to the proposed own contriution of Estonin Air of EUR 38 million (or 48,3 % of the totl restructuring costs of EUR 78,7 million), the Commission noted tht it ppered in principle cceptle. However, the Commission expressed douts on the sle of three ircrft CRJ900 in 2015, the sle of AS Estonin Air Regionl nd the sle of Estonin Air s 51 % stke in Eesti Aviokütuse Teenuste AS. The Commission nonetheless considered tht the sle of property, new lon from [ ] nd the sle of Estonin Air s 60 % stke in AS Amdeus Eesti could e ccepted s own contriution. (81) Finlly, the Commission reclled its douts in the rescue id opening decisions s regrds the comptiility of mesures 1 to 5, which could led to rech of the one time, lst time principle. (82) On tht sis, the Commission douted whether the notified restructuring mesure complied with the 2004 R&R Guidelines nd would e comptile with the internl mrket. It requested Estoni to sumit comments nd to provide ll informtion s my help to ssess the cpitl injection notified s restructuring id. (83) As regrds the complint received on 23 My 2013 regrding sle-nd-lese-ck greement etween Estonin Air nd Tllinn Airport (see recitl 10 ove), the Commission concluded tht it did not entil n undue dvntge to Estonin Air nd thus excluded the presence of Stte id. 6. COMMENTS ON THE OPENING DECISIONS 6.1. Comments from Estoni (84) Estoni provided comments on the Commission s rescue id opening decisions y letters of 9 April nd 17 My As regrds mesure 1, Estoni is of the view tht the investment ws completed on the sis of credile usiness pln nd positive vlution of the irline. Estoni indictes tht SAS s contriution (which prtly took

16 L 174/14 Officil Journl of the Europen Union the form of lon-to-equity conversion) is to e seen in roder context in which SAS hd provided lons to Estonin Air of USD [ ] million in 2008 nd of EUR [ ] million in As regrds the Stte s prticiption, Estoni explins tht it sed its decision on vlution report produced y the Ministry of Economic Affirs nd Communictions ccording to which the vlue of the irline post-investment would exceed its pre-investment vlue. In ddition, Estoni highlights tht ech shreholder crried out its own nlysis of the opertion nd tht they ll decided to inject cpitl in proportion to their shreholdings, which would render mesure 1 pri pssu. (85) Estoni first notes in reltion to mesure 2 tht the sence of tender is in no wy conclusive tht Stte id is present nd tht in ny event the sle ws sed on trnsction vlue tht reflected the true mrket price of the ground hndling usiness of Estonin Air, which ws moreover profit-mking. According to Estoni, mesure 2 consisted of the sle of the ground hndling ssets of the irline without employees or liilities nd the ook vlue of the ssets represented floor price. In ddition, Estoni is of the opinion tht the trnsction ws comprle to similr ones. Estoni moreover emphsises tht Tllinn Airport is n independent entity with no Stte interference nd tht ll memers of the mngement nd supervisory ords re independent usiness people nd not representtives or ppointees of the Stte. (86) Moreover, Estoni provides clrifictions s regrds the exct structure of mesure 3, which it lso considers idfree. Estoni lso clims tht the prticiption of SAS mounts to EUR [ ] million, nmely the EUR 2 million injected in csh plus the cquisition of Cresco s stke for EUR [ ] million. As regrds the 2010 usiness pln, Estoni is of the opinion tht tht pln ws sed on sustinle growth nd ws sed on positive expecttions for the recovery nd growth of the Estonin economy nd of the interntionl Air Trnsport Assocition s (IATA) expecttions t the time for interntionl trffic growth. According to Estoni, the 2010 usiness pln included ll the drivers necessry for prudent nd credile investment decision. As regrds the fct tht the Stte took into ccount mcroeconomic considertions, Estoni rgues tht these considertions were not the sole drivers of the Stte s investment decision. Estoni lso provides vlution of the irline y senior economics nlyst of the Ministry of Economic Affirs nd Communictions indicting the totl vlue of equity of Estonin Air fter the dditionl investment (on the sis of discounted forecsted csh flows) s EUR [0-10] million. (87) As regrds the Stte s decision to invest EUR 30 million in 2011/2012 (mesure 4), Estoni first oserves tht in 2011 the Estern Europen mrket ws reltively stle in its growth prospects nd tht in the summer of 2011 the Europen vition mrket ws not yet in turmoil. Estoni moreover rgues tht SAS did not prticipte to mesure 4 ecuse it ws fcing severe finncil difficulties t the time. As regrds [ ] lon, which ws supposed to e grnted to the irline ut which ws not in the end, Estoni considers tht it hs to e seen seprtely from its equity investment. Estoni lso highlights tht the 2011 usiness pln ws roust nd credile, nd tht it included n expnsionry strtegy sed on solid nd elorte economic nlysis of the vition mrket of the region nd the envisged economic development of the surrounding countries. Estoni lso clims tht in 2011 the irline s equity ws vlule oth pre nd post the cpitl injection. Although Estoni cknowledges tht the 2011 usiness pln ws not vile nd ws ndoned in mid-2012, it clims tht t the time of deciding whether to crry out mesure 4 the Stte elieved tht the irline would e le to restore its viility. (88) In reltion to the rescue lon fcility (mesure 5), Estoni is of the view tht ll the conditions of rescue id of the 2004 R&R Guidelines were met. Estoni however considers tht Estonin Air could e considered to e in difficulty only s of June/July Since it concludes tht mesures 1 to 4 did not entil Stte id, the one time, lst time principle of the 2004 R&R Guidelines is not reched. Estoni nonetheless dds tht if the Commission were to find rech of the one time, lst time principle, it should tke into ccount tht Estonin Air serves only 0,17 % of the intr-europen trffic nd tht there re no dverse spill-over effects on other Memer Sttes or ny undue distortions of competition s result of the id. (89) In its comments of 19 Mrch 2014 on the restructuring id opening decision (mesure 6), Estoni reitertes the rguments in reltion to the one time, lst time principle. As regrds the restortion of Estonin Air s long-term viility, Estoni considers tht the Commission should llow for the inclusion of mitigtion ctions y the mngement in the sensitivity nlysis, since this is how norml usinesses work. (90) Estoni lso provides some clrifictions on how the Level 1 nd DOC contriutions nd the profitility mrgin of the routes offered s compenstory mesures were clculted (see recitl 79). According to Estoni, Level 1 contriution defines the mrginl revenue ech pssenger rings, not counting flying costs, while the DOC contriution defines the contriution pssenger rings including ll the vrile costs of flying ut not ircrft-relted costs or ny other overheds. Estoni moreover clims tht the routes re to e considered cceptle compenstory mesures ecuse they ll hd positive contriution t Level 1 nd refuses the Commission s rgument tht the ndoned routes would not e profitle under the new usiness model.