Condor Secures Government-Backed Bridging Loan

 - September 25, 2019, 1:17 PM
Condor's 58-aircraft fleet includes Boeing 767-300s.

Germany has pledged a €380 million ($418 million) six-month bridging loan to Condor Flugdienst, the German airline subsidiary of Thomas Cook Group, after deciding the airline’s difficulties were not of its own doing and its balance sheet proved sound. Thomas Cook Group filed for bankruptcy on Monday morning. German economy minister Peter Altmaier described the loan as “massive”—it totals more than twice the €150 million bridging loan the government granted to struggling Air Berlin, which ranked as the country’s second largest airline when it filed for insolvency in August 2017—and stressed that political criteria did not drive the decision but rested on “thorough and careful ” economic analysis of the company by several ministerial departments. “Condor is a profitable company. Its difficulties are due to the sudden collapses of its parent company,” he said, adding that the financial facility offers the prospect of saving many the carrier's nearly 5,000 jobs and will allow for the return in “acceptable conditions” of the 240,000 Condor passengers now abroad.

The federal government and the government of the state of Hesse, where Condor bases its operations, are jointly guaranteeing the loan. The money will be disbursed, as in the case of Air Berlin, by German state-owned development bank KfW.  The bridging loan requires the approval of the European Commission and Condor must be removed from Thomas Cook Group’s liability scheme. German authorities are already in “good and constructive talks” with Brussels, according to Altmaier. The EC must rule that the €380 million does not amount to illegal state aid.

The so-called protective shielding procedure to protect Condor from possible claims of its insolvent parent company and to separate itself from the London-based Thomas Cook Group “is a formally necessary and logical step for us,” commented Condor CEO Ralf Teckentrup. “In the current situation, this step is the best for our customers, our business partners, suppliers and for us. It gives us full independence from Thomas Cook Group and more security for our future.” The protective shield procedure is a special proceeding of German insolvency law, which can be granted in cases with a positive prospect of a successful restructuring by the court.

Condor is a “healthy and profitable company, which will also record a positive result in the current year,” Teckentrup said. He justified the need for the state loan to bridge financing for the coming winter season on the his assertion that “liquidity for the seasonal weaker winter booking period was used up by our insolvent parent company.” In the 2018-2019 financial year, Condor generated an operating profit of €43 million and a turnover of around €1.8 billion.

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, Boeing 757-300s, Airbus A320-200s, A321-200s, Airbus A330-200s, and A330-300s.

“Our fleet is operating and ticket sales for Condor flights continue as normal,” Teckentrup said.

Meanwhile, the UK CAA continues wet-lease operations to repatriate the 150,000 passengers stranded abroad following the collapse of Thomas Cook Group and the immediate grounding of Thomas Cook Airlines UK. On Monday and Tuesday, the first two days of the repatriation exercise, it operated 134 flights and brought 28,970 passengers back to the UK. On Wednesday, it plans to operate more than 70 flights with seats for more than 16,500 people. The flying program continues until Sunday, October 6, with more than 1,000 flights planned.