German carrier Condor is preparing restructuring initiatives as it emerges from the collapsed Thomas Cook Group, having been cleared by European regulators to receive a bridge loan to support its development.
The loan of €380 million is being provided by German state bank KfW.
Condor faces an “acute liquidity shortage” as a result of the Thomas Cook collapse, says the European Commission, and has had to write off “significant” claims with respect to other companies associated with the tour operator.
It adds that the backing for Condor – strictly limited to six months – will help with ensuring “orderly continuation” of flight services.
Condor will need to demonstrate its liquidity needs on a weekly basis, under the conditions of the loan, and new instalments will only be paid when prior liquidity is exhausted.
Once the six-month time limit is up, the airline must have already fully repaid the loan, or will undergo a comprehensive restructuring aimed at restoring itself to long-term viability. The German government has committed to these conditions.
“Such possible restructuring would be subject to the Commission’s assessment and approval,” says the regulator.
The Commission says its rules on rescue aid allow states to support companies in difficulty as long as the assistance meets certain criteria, including limits on time and scope.
Condor’s assistance from KfW will keep potential distortion of competition “to a minimum”, it states.
The airline says the loan will “secure” its operations over the traditionally-weak winter season.
Chief executive Ralf Teckentrup adds that the agreement is crucial to Condor’s future, and signifies the competitiveness “importance” of the carrier.
“A healthy Condor is also clearly in the interest of a functioning market,” he says. “Because we are not only an essential competitor in the tourism segment, but also important for the competitive aviation structure in Germany and Europe.”
Condor’s provisional administrator, Lucas Flother, says the airline’s management will develop a restructuring plan, under a protective process, to prepare the carrier for its future outside of the tour operator.
“I am confident that, at the end of this process, a new partner for Condor will be found, securing a sustainable future for the airline and enabling further growth,” he adds.
Condor states that its current booking situation is exceeding its expectations, and that it is in talks with tour operators for a “promising” summer 2020.