The EU has approved Germany’s state-aid benefitting leisure airline Condor. The charter carrier, which found itself parent-less when Thomas Cook failed in 2019, is being granted just over €525 million to compensate for damages suffered due to COVID. The funding is also in support of its restructuring plan, which has just been approved by the Commission.
Writing off existing loans for restructuring
While Ryanair may have won the battle against Condor’s state-aid, it did not win the war. The European Commission announced on Tuesday that it had found the aid package, worth a total of €525.3 million ($619 million) to be in line with the bloc’s regulations.
The money is divided over damages suffered as a result of the COVID-19 outbreak, amounting to just over €200 million ($236 million), with the remainder being earmarked for restructuring support. This includes writing off €90 million ($106 million) in existing loans and €20.2 million ($24 million) in interest.
Speaking on the decision to sanction the funds to the struggling leisure airline, the Commission’s Vice-President in charge of competition policy, Margrethe Vestager, said in a statement,
“The aviation sector has been hit particularly hard by the various travel restrictions necessary to contain the spread of the coronavirus. The measures we approved today will enable Germany to compensate Condor for damages directly suffered as a result of such restrictions. At the same time, the restructuring plan for Condor, which we have also approved today, will ensure the airline’s path towards long-term viability.”
A small victory for Ryanair
A month and a half ago, on June 9th, the General Court of the European Union annulled a previous decision to allow Condor state-aid at the slightly larger sum of €550 million. The decision followed a petition from solicitous suer Ryanair, arguing that the aid constituted an unfair government bailout.
However, the court never questioned the legality of the aid as such. Rather, it expressed doubts on how the amount had been calculated. Condor did not have to return any of the cash already received while waiting for the new EU decision, and could therefore carry on operating according to planned schedules.
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Two years of uncertainty coming to an end
In January 2020, a few months after Condor’s parent company Thomas Cook ceased operations, LOT Polish Airlines parent company, Polish Aviation Group (PGL), proclaimed its intention of acquiring Condor. However, then COVID hit, and the plans came to naught. In April the same year, PGL announced that the deal, intended to close that very month and worth €300 million ($353 million), was off.
Condor exited ‘protective shield proceedings’ on December 1st last year. In May this year, UK private equity fund Attestor Captial acquired 51% of the company’s shares. The fund pledged to invest €200 million of equity capital as well as €250 million to modernize the airline’s long-haul fleet. Condor currently operates 15 leased Boeing 767s with an average age of close to 26 years. However, as the leases expire, the airline has chosen not to renew.