STORY UPDATE: January 24, 2020, Polish Aviation Group, the parent of LOT Polish Airlines has agreed to purchase Condor Airlines. The deal is expected to be completed in April, 2020.
On Monday, I wrote that Condor Airlines was seeking a lifeline in light of the Thomas Cook bankruptcy. Thomas Cook owned a large portion of Condor stock so it left Condor in a precarious financial situation. Condor operated as a subsidiary of the Thomas Cook Group. The Thomas Cook bankruptcy couldn’t have come at a worse time since Condor is heading into the winter season. Condor had been operating as a profitable airline and needs to distance itself from the Thomas Cook debacle.
Condor is seeking a loan from German bank KfW pending approval by the Hesse state government and the federal government of Germany. Condor needs a positive decision from the Commission before it receives the money and there is no defined timeline for that decision. The loan amounts to a six-month bridge loan in the amount of 380 million euros ($418 million USD). The loan is needed to support the carrier through the low-activity winter season.
Chief executive Ralf Teckentrup says the airline is “operationally healthy and profitable and is set to post a positive result in the current financial year. Its liquidity was “used up” by its parent and the carrier needs the loan to help it through the winter”.
“The [state guarantee] commitment is an important step in securing our future,” added Teckentrup.
Condor had operated as the in-house carriers for C & N Touristic which was a “leisure travel” firm that was half-owned by Lufthansa. C & N acquired Thomas Cook in 2001 and was renamed Thomas Cook. Condor was rebranded as Thomas Cook Airlines and later renamed back to Condor. Lufthansa still retains a 25% ownership stake in Condor. Air Berlin planned on acquiring Condor in 2008 but that deal fell apart. Lufthansa looked at acquiring Condor earlier this year when The Thomas Cook Group began facing financial pressures.
The airline primarily existed to fly tour groups in aircraft configured with all economy seats. The carrier’s 767 fleet added some business and premium economy seats as it moved to be a stand-alone airline, particularly in the trans-Atlantic market. Condor was one of a few airlines that operated the stretched Boeing 757-300 model.
Blame it on Brexit?
The financial autopsy of Thomas Cook is just beginning. Thomas Cook operated as a full-service, package-deal travel company. Future bookings at Thomas Cook have been on a decline. It could be that Brits are faced with economic uncertainty because of the unknown results of Brexit. Whatever the reason is, travel and leisure spending in the UK is down. This reduction in bookings was another problem for an already perilous financial situation.
What’s Next for Condor
Condor enjoys an excellent reputation and following in Germany. Lufthansa would benefit from a possible takeover to gain Condor’s landing slots. It looks like for now, the carrier will continue as it moves to distance itself from Thomas Cook. CEO Ralf Teckentrup goes on to say “Condor is also moving to protect itself from future claims from its insolvent parent through a ‘shield’ procedure permissible under German law in certain circumstances for companies with good prospects”.