MIAMI – Condor Flugdienst (DE) is set to receive €550m in loans from the German government and the state of Hesse to help it weather out the coronavirus crisis. The loans are to be issued through the state-owned KfW investment bank.
In today’s statement, DE said the state aid was comprised of a €294m loan plus €256m to refinance an earlier government bridging loan, as the German Economy Minister Peter Altmaier said authorities would stand by Condor “through this difficult time”.
According to a report by the AFP, Altmaier reiterated that the company had been operationally healthy and profitable in normal times and had good prospects for the future.
In January, LOT (LO) offered to buy DE for US$328m, but at the beginning of this month, the Polish carrier was dealing with contingents on certain financial guarantees with which the government did not coincide.
A lifeline after an imminent collapse
The health of DE became worrisome after its owner corporation, Thomas Cook, which has a 49% stake in the carrier, collapsed in September 2019. By that time, DE asked for a US$415m rescue loan that was granted with the arrangement that the Polish Aviation Group (PGL) would repay such debt.
However, the German government was set to nationalize DE as the deal between the carrier and PGL seemed likely to collapse due to the COVID-19 crisis.
At the time, neither DE, which employs some 4,900 people, PGL nor the national administration made any final decision as the German carrier said it was in talks with the parties involved.
Today, DE has the backing of the European Commission, giving Condor’s lifeline the green light to secure the new state loan and the refinancing of the previous one.
EU competition commissioner Margrethe Vestager stated that the state-guaranteed €550m loan would allow Germany to compensate DE “for part of the damage suffered due to the coronavirus outbreak.”
Berlin’s €1.1b pledge
According to the AFP, Berlin has pledged more than €1.1b in support for companies and employees, with Altmaier vowing that no healthy company should go under because of the coronavirus crisis.
Deutsche Lufthansa AG, the largest German airline, agreed this month on the first restructuring package following the heavy disruption caused by the COVID-19 pandemic. The package entails a significant withdrawal of aircraft from its fleet, needing state support to stay afloat in 2020.
Founded in 1956, Condor carries 10 million passengers annually to the Mediterranean, Canada, the US, and the Caribean.