Brussels (Brussels Morning Newspaper) – The European Commission announced on Monday that it has approved €321.2 million in restructuring aid provided by Germany for Condor, in accordance with EU State aid regulations.
The move comes after a court ruling in May 2024 that invalidated the Commission’s previous 2021 decision following Irish carrier Ryanair’s challenge against the 2019 government bailout of Condor. In July last year, Condor claimed it was hopeful the EU would approve the authorisation of the aid.
Condor, the German charter airline with a primary business in holiday flying, declared insolvency in 2019 after its parent group, Thomas Cook, went bust. The support is to bring back the long-term stability of the airline.
Why was the previous 2021 decision on Condor aid overturned?
In July 2021, the Commission gave its approval to a €321.2 million restructuring action aimed at allowing Condor to return to profitability. The restructuring action included: (i) a €90 million write-off of a state-guaranteed €550 million public loan by the German development bank KfW, (ii) a rescheduling of the repayment terms of the balance of that loan, as far as it had been used to finance restructuring expenditures, and (iii) an interest write-off of €20.2 million.
On 8 May 2024, the General Court declared void the Commission’s decision. The Court held that the Commission had failed to examine whether Germany was sufficiently remunerated for the debt write-offs which had been awarded to Condor.
Why did the European Commission approve aid for Condor?
According to the commission, it re-examined the measure under the Guidelines on State Aid for Rescue and Restructuring. The Commission concluded that Condor is putting in place a wide-ranging package of restructuring measures that will restore it to long-term viability. Furthermore, Condor and its new private investor, Attestor are providing a substantial contribution to the restructuring cost, as they are financing more than 70% of the cost. The Commission observed that existing shareholders lost the entire value of their investment.
