OREANDA-NEWS. April 09, 2013. Estonian Air and Tallinn Airport signed an agreement for the sale of four-storey office building at Lennujaama 13. Estonian Air will continue to rent the office space on two upper floors of the building from the new owner.

„In the process of changing the business model of Estonian Air the company has decided, among other things, to divest its non-core assets and the sale of office building is part of that process,” explained Mr. Jan Palmer, the CEO of Estonian Air. “We have already considerably reduced our operations and thus our office space need is remarkably lower than previously.”

According to Jan Palmer, the smaller Estonian Air with cost effective structure has reduced the need of office space from 3500 to 950 m2.

Estonian Air put its property, four-storey building at Lennujaama tee 13, on sale late 2012 and the company received two independent offers to purchase the building. As of 4 April 2012, the property belongs to Tallinn Airport. The value of the sales contract is 7.5 million euros. The building is situated on Tallinn Airport’s land and legally it means termination of tenancy after which the landlord of the building is Tallinn Airport.

Estonian Air has signed a long-term rental agreement with Tallinn Airport to use the upper two floors of the building.

“Acquisition is in line with Tallinn Airport’s business operations.

„Due to enormous competition in aviation market and pressure on airport fees, Tallinn Airport has to earn a greater share of its income outside flight operations – just like any other airport in Europe,“ said Mr. Lauri Linnamae, the Communication Manager of Tallinn Airport. “This is to ensure we stay competitive with our airport fees and provide our society best possible flight connections.”

Tallinn Airport’s business policy has been to own the property situated on its land and to lease it to different operators. “This makes the acquisition of Estonian Air’s building a logical continuation in Tallinn Airport’s business operations,” said Linnamae.

Tallinn Airport has similar agreements also with other companies operating on the Tallinn Airport territory.

Tallinn Airport will seek to rent out the remaining space of Lennujaama 13 premises to interested operators in the airport.