Condor will survive the winter after the German federal government and the State of Hessen announced a so-called bridging loan to keep the carrier afloat.
Condor is a profitable airline and forecasts stability and growth in 2020. But parent company Thomas Cook plundered from its Germany subsidiary leading up to its collapse earlier this week. Thus, a bailout in the form of a bridge loan became necessary for Condor to survive the winter, a period of weaker demand in which airlines burn though liquidity more quickly.
Under the terms of the loan, Condor will receive €380 million ($420 million). The loan will be funded half by the German federal government and half by the State of Hessen, which includes Frankfurt and the home of Condor.
Hesse State Premier Volker Bouffier told Deutsche Welle:
Condor is a profitable company from Hesse that became a victim of its British parent company and of Brexit. We and the federal government believe that a new owner can keep Condor in the air for the long term.
We believe that this company from Hesse has a future and that it will continue to bring many holidaymakers to their destinations. But this support means that work has just begun for Condor. Now, the company has to start over without Thomas Cook.
That last point is key. Condor will now file a request to sever ties with Thomas Cook, a maneuver permissible under German insolvency law. Such a move, if granted, would shield Condor from any of Thomas Cook’s creditors. In the meantime, Condor will have more time to find an investment partner.
Before any money is transferred, the loan must be approved from European Commission. Approval is expected since the cash infusion does not represent state action to prop up an otherwise uncompetitive market participant, but a specific reaction to mismanagement on the part of Thomas Cook.
Condor CEO Ralf Teckentrup thanked the two governments for the bridging loan:
The 4,900 employees, as well as partners and clients of Condor, thank the German government and the state government of Hesse for their commitment.
But now begins the greater challenge of finding a suitable investment partner.
image: Thomas Naas / Flickr CC 3.0