Pilots in the United Kingdom have expressed outrage over the German government’s bailout of Condor. Is this a case of jealously or do the pilots have a point?
The British Airlines Pilots Association (BALPA) is the umbrella union representing pilots in the United Kingdom.
BALPA General Secretary, Brian Strutton issued a statement:
Good luck to the Condor staff and customers. But with UK holidaymakers stranded and 9,000 staff out of a job, the Thomas Cook directors need to explain why the UK airline had to be closed but the German one was allowed to continue to operate. How was it funded, because it seems there is nothing left in the coffers for UK staff? And why couldn’t the UK government give the same kind of bridging support as the German government when it was well known that Thomas Cook had a Chinese buyer lined up? It’s a national scandal.
The question is fair enough on the surface. If Condor was a profitable arm of Thomas Cook, why couldn’t money be pulled from that division to keep the whole company afloat?
The answer is because Condor, formally Condor Flugdienst GmbH, is an independent subsidiary. Thanks to swift action and the protection of German insolvency law, creditors were barred from seizing the assets of Condor to satisfy the debts of Thomas Cook.
Furthermore, keep in mind that Condor was not a wholly-owned subsidiary of Thomas Cook. Instead, Thomas Cook held a 49% stake.
So while it understandable that British pilots are outraged, their immediate ire is best directed at the British government, which chose not to bail out Thomas Cook, rather than Thomas Cook itself and especially Condor. Long-term, though, it was Thomas Cook’s ill-fated 2007 merger with with MyTravel that ultimately doomed it.
CONCLUSION
The age of “high street” travel agencies seems such a relic of the past. That Thomas Cook held on for so long is a testimony to the strength of its brand. But staggering debt service from poor investment choices ultimately doomed the airline, not Condor spreading its wings.
image: Thomas Cook
You forget that these are union leaders. Logic doesn’t factor into the issue. It’s just a good opportunity to complain about something and their employers.
Well… It works very well across the pond when their brethren in the colony complaint against middle east carrier. Blame first, logic later. Why not try it ourself? Surely no one will think us as stupid because of it. No one thinks us carriers blaming ME carriers is stupid.
That’s not the complete story – the German TC subsidiaries DID transfer a lot of cash to TC UK and Condor is cash flow positive and profitable – TC UK was neither…
The German government bridging loan is basically making up for the cash TC UK pulled out of Condor in the crisis, so Condor can make it through the winter. It’s not a “bail out”, it’s a loan that has to be paid back. The similar air Berlin loan was paid back in full…
It seems like a good approach, rather than spending millions of government money on bringing thousands of UK travelers home after TC UK collapsed….
I mentioned this in my earlier article on this matter. Thomas Cook did indeed loot Condor.
The Thomas Cook airline in the UK was profitable unlike the rest of the business so it’s also no wonder the crews are mad, I know I would be. Unfortuantely it was though bundled with the rest of the business in the UK unlike in the other countries where the brand operated including Germany and the Scandinavian countries.
The difference between the UK and Germany is a simple one. In the UK corporate greed is allowed to rule and there is no safety net to it. In Germany there is a greater sense of social responsibility and the government will have looked carefully at the impact of the operation of Condor and the German TC brands like Neckermann closing overnight and decided that it was worth steadying the operation with assistance.
Free enterprise isn’t everything except to those drawing off the huge profits of corporate greed with no accountability when things go wrong.
I read this in one article, but it wasn’t cited. It’s a fascinating angle to this story. Do you have any financials that show that the airline was profitable and it was the travel agencies that were such a drag?
https://www.allabolag.se/5560419862/thomas-cook-northern-europe-aktiebolag
That is in Swedish, and is for the tc travel agency in the Nordic. Translate the page if you want. Since the airline is incorporated in Denmark I could not find its Financials as easy. TC Nordic has been profitable every year. I bet the same is true for the German wing of TC.