In December 2022, Transpordi Varahaldus OÜ (TVH) acquired eight CF34-8C5A1 jet engines manufactured by General Electric to operate the company’s fleet more efficiently. At the same time, TVH signed agreements for the lease-out of four of the purchased engines and the sale of six vintage engine cores.

According to Ergo Blumfeldt, member of management board, the company acquired aircraft engines with sufficient service life from the aftermarket, which will enable the lessee (AS Nordic Aviation Group) to carry out heavy maintenance of TVH-owned aircraft more efficiently. He added that according to preliminary unaudited financial results, TVH closed 2022 with a net profit of €2.9 million on a turnover of €8.5 million, and that by end of the year TVH’s assets on the balance sheet amounted to €78.2 million.

TVH is a state-owned company whose purpose is to act as an investment vehicle, financing and managing investments into fixed assets in the transport sector. The company’s assets include seven CRJ900 Next-Generation jet airliners.

Transpordi Varahaldus acquired two second-hand aircraft engines for more efficient operation of the company’s fleet of CRJ900 NextGen aircraft.

The Estonian government-owned Transpordi Varahaldus OÜ (TVH) has acquired two aftermarket CF34-8C5A1 jet engines manufactured by General Electric in order to more efficiently operate the seven CRJ900NG-type passenger jet aircraft in its fleet.

According to Ergo Blumfeldt, member of the TVH’s management board, this was a good opportunity to acquire aircraft engines with sufficient service life from the aftermarket to reduce the downtime of the company’s aircraft during time-consuming engine overhauls. He added that the spare engines will allow the overhaul of existing engines to be better timed and thus more economical, and that the purchase was financed from TVH own funds.

TVH is a state-owned company whose purpose is to act as an investment company, financing and managing investments in fixed assets in the transport sector. Its fleet consists of seven CRJ900 Next-Generation passenger jet aircraft.

On April 22nd, 2022 the annual general meeting of shareholders of OÜ Transpordi Varahaldus (TVH) – the Minister of Economic Affairs and Infrastructure Taavi Aas, as the representative of the sole shareholder – the Republic of Estonia, approved the company’s annual report for the financial year 2021, recording a turnover of 9.056 million euros and a net profit of 2.711 million euros.

According to Minister Taavi Aas, starting from spring 2020 global aviation has gone through the severest crisis in history; however, TVH’s business plan has weathered the tough times well. Aas recognised that the company has in good time taken necessary measures and implemented changes restoring the profitability of its business.

Ergo Blumfeldt, member of the management board, explained that 2021 was a very busy year: the company’s bonds worth 23 million euros were redeemed and refinanced with a loan from LHV Pank; two vintage General Electric aircraft engines were acquired; company’s long-term investment plan was updated and the terms of all lease agreements were adjusted to the changed market situation. Blumfeldt asserted that at the end of the past financial year the negative impact of the COVID pandemic on global aviation started to ease and this was also reflected in an increase in the use of TVH’s aircraft as well as associated earnings.

TVH was established in 2015 by its sole shareholder the Republic of Estonia with an aim of operating as an investment company that finances and manages investments into fixed assets in the field of transport. TVH owns and rents out a total of seven Bombardier CRJ900NG-type passenger aircraft. The long-term lessee of the aircraft is AS Nordic Aviation Group (Nordica) whose subsidiary Regional Jet OÜ (Xfly) provides ACMI services to European airlines such as SAS, Nordica, etc.

Seven Bombardier CRJ900 type aircraft owned by Transpordi Varahaldus OÜ (TVH) are now fully financed by LHV Pank, while Estonia’s national airline Nordica continues as their lessee. Government-owned TVH refinanced its previously issued bonds with a 23 million euro loan from an Estonian LHV Pank.

In 2017 and 2018, TVH issued bonds for a total of 35 million euros which were purchased in equal parts by LHV Pension Funds and LHV Pank. TVH used the financing to purchase additional CRJ900-type aircraft and lease them to Nordic Aviation Group AS (Nordica). The outstanding amount of the bonds was now refinanced with a bank loan obtained from LHV Pank.

Indrek Nuume, Head of Business Banking at LHV Pank, said that the local bank and the local aircraft owner were a perfect match. “Our cooperation with TVH has been long-standing, successful and reliable. We’re glad to be involved in their investment plans. As LHV Pension Funds are always on a lookout for new investment opportunities with a higher rate of return, we agreed on new suitable bank financing terms with TVH. We can see that the sector is recovering well and wish all the success to Estonian aviation,” Nuume added.

Ergo Blumfeldt, Member of TVH’s Management Board, noted that the two past years had been exceedingly complicated for aviation. He explained however, that due to reliable and long-standing cooperation with the lessee and the financiers alike, the asset holding company has weathered the crisis well, managing to keep its current commercial activities profitable. Blumfeldt pointed out a positive development that in recent months the regional aviation market has been clearly showing significant restoration of demand.

According to the audited financial results for 2020 the operating profit of OÜ Transpordi Varahaldus (TVH) was 1.84 million euros at a 9.38 million euro annual turnover.

According to the member of the management board Ergo Blumfeldt, the last financial year was the most complicated in commercial aviation of the last 75-years in history due to the COVID-19 pandemic. Globally, the passenger numbers fell by more than 80% and the ongoing health crisis had major negative impact on the economic results of aviation companies and the market value of aircraft. Utilization of TVH aircraft declined by 79.2% compared to 2019. Pursuant to the International Financial Reporting Standards (IFRS), TVH also carried out the impairment review of its fixed assets, as a result of which the accounting loss of the last financial year was ca 11.9 million euros.

Member of the management board Tõnis Tamme added that thanks to good cooperation with the lessee of the aircraft and the bondholders financing the company (LHV Bank and the pension funds managed by LHV), the company has taken the measures and made the changes necessary to handle the crisis and has managed to keep its business operations profitable. As a positive development Tamme mentioned that over the past few months the first signs of recovery in passenger demand are visible on the regional aviation market.

The annual accounts of TVH were audited by AS Deloitte Audit Eesti. Minister of economic affairs and infrastructure who exercises the rights of the sole shareholder of TVH approved the annual report at the shareholders’ meeting on 30.04.2021. TVH is a state-owned company with the aim to carry out and manage investments into fixed assets in the transport sector, e.g. aircraft leasing. The company owns 7 Bombardier CRJ900NG passenger jet aircraft in 88-seats configuration.

On May 4th, 2021 the minister for economy and infrastructure, acting as the representative of the sole shareholder of Transpordi Varahaldus OÜ, recalled Katrin Andre ja Kaupo Raag from the supervisory board of the company and appointed two new members. Ave Henberg is a legal counselor at the Legal Department of the Ministry of Economy and Communications, Raoul Lättemäe works as the Head of the Fiscal Policy Department of the Ministry of Finance.

The chairman of the supervisory board Maigi Pärnik-Pernik thanked Kaupo Raag and Katrin Andre for their significant contribution into the development of TVH. She also welcomed the new supervisory board members who have accepted the challenge to contribute to the Estonian aviation in these complicated times.

According to the audited financial results for 2019, the annual turnover of OÜ Transpordi Varahaldus (TVH) was 9.1 million euros and net profit was 3.2 million. Minister of economic affairs and infrastructure who exercises the rights of the sole shareholder of TVH approved the annual report which was audited by AS Deloitte Audit Eesti.

According to the member of the management board Ergo Blumfeldt, the last financial year went successfully according to the plans of the company. In addition to leasing aircrafts, the company also started leasing airplane spare parts, tools and components. Blumfeldt added that considering the rapid spreading of COVID-19 and the likely negative impacts that will target commercial aviation globally, the current financial year will be very complicated also for aircraft lessors.

TVH is a state-owned company with the aim to carry out and manage investments into fixed assets in the transport sector, e.g. aircraft leasing. The company owns 7 Bombardier CRJ900NG passenger jet aircraft in 88-seats configuration.

Estonian Aviation Cluster www.eac.ee is a non-profit association established in early 2019. It unites aviation-related Estonian undertakings and organisations and through cooperation, seeks involvement in creation of the national aviation strategy and also aims at increasing the attractiveness of Estonia as an aviation country in the eyes of investors.

According to Kristo Reinsalu, General Manager of the Aviation Cluster, “Aviation is a growing industry: it stands for much more than just direct links and carriage of passengers. The Cluster brings together all companies in the aviation value chain from airport and air carriers to various companies providing miscellaneous services in the area of maintenance, IT, logistics, transport and tourism”.

Reinsalu says that the organisation has three main tasks that consist in increasing the competitive ability of Estonian aviation, enhancing its marketing and promoting innovation in aviation sector. “It is a welcome and logical move that Transpordi Varahaldus OÜ (TVH) – the largest aircraft asset management company in Estonia – decided to join our cluster,” said Reinsalu, who finds that with its seven Bombardier CRJ900 passenger aircraft, TVH will represent the view and needs of asset management companies that were missing from the aviation cluster before.

Ergo Blumfeldt, the member of the management board of TVH noted that joining the cluster was driven by the wish to promote national aviation sector that, unlike common belief, comprises much more than just the companies directly involved in air transport. Symbiotic relationship of various sector participants is beneficial for everyone, as demonstrated by positive examples from both Estonian Association of Information Technology and Telecommunications and Estonian Defence Industry Association.

According to the audited annual accounts of Transpordi Varahaldus OÜ for 2018 the company’s profit for the last financial year were 3.6 million euros at a turnover of 7.9 million euros. Compared to the previous financial year 2017 the company’s turnover increased 14% while its profit went up by 24%. The annual accounts of the company were audited by AS Deloitte Audit Eesti. The Minister of Economy and Infrastructure, acting in the name of the sole shareholder of TVH, approved the annual accounts at the meeting of shareholders on 15.05.2019.

TVH Management Board Member Ergo Blumfeldt said that the most important event in 2018 was the expansion of the company’s fleet from six aircraft to seven. In December 2018 TVH acquired a Bombardier CRJ900 aircraft and leased it to the Estonian national airline Nordica. The transaction was financed with 10 million euros through a bonds issue which were acquired by LHV Bank and LHV funds in equal parts.

TVH is a fully state-owned company, the objective of which is to function as an investment entity that finances and manages investments in fixed assets in the transport sector, incl. investments for leasing purposes. The company owns seven 88-seater Bombardier CRJ900 NG jet aircraft.

Photo by Thomas Tõnisson

As a result of a successful bond issue of 10 million euros OÜ Transpordi Varahaldus acquired an additional CRJ900 NextGen type aircraft, which was long-term leased to the Estonian national airline Nordica.

In December 2018 Transpordi Varahaldus OÜ (TVH) issued securities amounting to 10 million euros with an 8-year maturity. Securities were purchased by Estonian financial institutions AS LHV Varahaldus and AS LHV Pank. TVH used the additional finances for the acquisition of one vintage CRJ900NG, thereby increasing the fleet of the company to seven aircraft of the same type.

According to the member of the management board of TVH – Ergo Blumfeldt, this transaction marks the planned gradual expansion of the business activities of the company, preceded by thorough financial analysis and due performance of the current business plan. According to the estimation of the management board TVH will earn a profit of ca 3 million euros in 2018.

LHV Pension Funds Manager – Romet Enok noted that TVH bonds provide higher yield than usually found on the markets today. “We continue to search for and analyse local projects that are suitable for investing pension funds money into the Estonian economy and an additional aircraft with already pre-determined employment is an asset with real value and a properly secured investment,” Romet Enok explained.

„LHV Bank is glad to be involved in the investment plans of Transpordi Varahaldus. Estonian capital and an Estonian airline are still a good match and our cooperation allows the financing of also more expensive and unusual assets and finding the most suitable solution for our client,” commented LHV Corporate Banking Manager – Indrek Nuume.

In the course of the ongoing reorganisation of its activities, the Estonian national carrier Nordica intends to develop its business in export of services and the new aircraft has already been deployed for providing services to the leading Scandinavian airline SAS. According to the Chairman of the Board of Nordica – Hannes Saarpuu, the current market situation provides interesting export opportunities. “In case the supply currently exceeds demand in Tallinn airport, then it is reasonable for us to be present where we can expand our business in a more profitable manner. Issue of securities by TVH represents a good example of investors’ faith in the sustainability of our plans,” added Saarpuu.

Acquired aircraft is well-maintained and manufactured in the Bombardier factory in Canada, equivalent to the existing fleet of Nordica. The Estonian flag carrier continues its strategy of using same type of aircraft to maximise cost-efficient exploitation of its fleet.

TVH is a state-owned company operating as an investment entity, with the aim of financing and managing investments in fixed assets in the transport sector. Previously, TVH has carried out a successful bond issue of 25 million euros in 2017, which then allowed the acquisition of two CRJ900NG aircraft.