German leisure carrier Condor has been promised a six-month bridging loan, amounting to €380 million ($418 million), to support the company through the winter season following the collapse of parent Thomas Cook Group.
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.
Frankfurt-based state bank KfW is to provide the loan, although this has yet to be approved by European Commission regulators.
Condor says the loan will be backed by a guarantee from both the Hesse state government and the federal government.
“Only after a positive decision from [the Commission] will the loan be paid,” the airline points out, adding that it has no fixed timeframe for this decision.
The financial support will provide additional liquidity to the carrier as it enters the low-activity winter season.
Condor had been operating as a subsidiary of Thomas Cook Group which ceased operations on 23 September.
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.
But he says 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,” adds Teckentrup.
Condor was the in-house carrier of German leisure firm C&N Touristic, a firm which was half-owned by Lufthansa at the time when it acquired UK tour operator Thomas Cook – which had its own in-house operator, JMC Airlines – in 2001.
C&N was renamed as Thomas Cook following the acquisition, and both JMC Airlines and Condor initially took on the Thomas Cook Airlines name – although Condor subsequently reverted to its original brand.
Lufthansa sold its 50% share of Thomas Cook to the tour operator’s co-owner, retailer KarstadtQuelle, shortly before Thomas Cook merged with the UK’s MyTravel Group in 2007, to emerge as Thomas Cook Group.
Lufthansa retained a near-25% share of Condor, with Thomas Cook Group holding the balance, but opted against exercising a right to take full ownership of the airline, allowing Thomas Cook Group to proceed with a plan to sell the entirety of Condor to Air Berlin in 2009-10.
But Air Berlin abandoned the plan to acquire Condor in 2008 after the takeover became mired in an investigation by the German competition regulator, and Lufthansa instead sold its share to Thomas Cook Group in 2009.
Lufthansa was among the companies interested in acquiring Condor earlier this year, when Thomas Cook Group, struggling under financial pressures, conducted a review of its airline operations.
Teckentrup says the ‘shield’ application to defend Condor against its failed parent is a “necessary and logical step”.
“We gain full independence from the Thomas Cook Group and more security for our future,” he adds. “Our business is running according to plan.”
Condor says a committee of creditors will be established to represent major creditors including employees, suppliers and airport operators.
Source: FlightGlobal.com
