The European Commission has approved a €380 million ($419 million) German government-backed bridging loan to Condor Flugdienst, handing the Frankfurt-headquartered airline subsidiary of the bankrupt British travel group Thomas Cook a six-month reprieve to work out a restructuring plan and find new investors. Brussels said it green-lighted the rescue loan because the measure will help ensure the orderly continuation of flights and avoid disruptions for passengers while the conditions attached to the loan will reduce the distortion of competition “potentially triggered by the state support to a minimum.” Therefore, the financial support complies with EU state aid rules, the bloc’s competition authority said on Monday. Under the EU rules, member countries may support companies in distress, provided those countries limit the public support measures in time and scope and the aid contributes to an objective of common interest.
The German federal government and the state of Hesse have agreed to jointly guarantee the loan, which will be paid by Germany’s public development bank KfW.
The bank will disburse the funds “under stringent conditions,” the European Commission insisted. Condor will need to demonstrate its liquidity needs on a weekly basis and new installments will only arrive when the company uses all existing liquidity. Germany committed to ensuring that, after six months, Condor will either fully repay the loan or it will carry out a comprehensive restructuring to return to viability in the long-term. Such possible restructuring would fall subject to the Commission's assessment and approval.
Condor controls the necessary liquidity to bridge the winter season and continue business operations in full, noted the company’s provisional administrator, Lucas Flöther. He expressed confidence the airline will find a new partner “that will secure a sustainable future for the airline and enable further growth.”
Calling the bridging loan “an important step” towards securing Condor's future, CEO Ralf Teckentrup described bookings as “encouraging” and even surpassing expectations. “We are already in advanced discussions with all tour operators for a good and successful booking level for summer 2020,” he said.
The airline carries some 8 million passengers a year from eight German airports to more than 100 destinations in Europe, Africa, and the U.S. It operates a fleet of 58 aircraft, comprising Boeing 767-300ERs and 757-300s and Airbus A320-200s, A321-200s, A330-200s, and A330-300s.