Condor’s Future Secured With New Bridge Loan

Filed Under: Other Airlines

At the beginning of the week Thomas Cook ceased operations. Thomas Cook is one of the world’s oldest travel companies. They were more than just an airline, as they were a package holiday operator more than anything, and owned airlines, hotels, and more.

It’s sad that the UK airline Thomas Cook went out of business when that wasn’t even the part of the business that was struggling.

Another interesting aspect of this was that Thomas Cook owns Germany’s Condor Airlines, which is profitable. When it was announced that Thomas Cook ceased operations, Condor announced that they’d continue to operate as normal, and that Germany’s government would likely give them a bridging loan. Well, we now have the details of that.

Germany Grants Condor Bridge Loan Guarantee

Yesterday Condor received a guarantee from the German government and the Hessian State Government for six-month bridge loan in the amount of 380 million EUR. This is also subject to approval by the European Commission, at which point the loan can be disbursed.

This was done in order to prevent liquidity issues at Condor, resulting from the insolvency of their parent company. Like I said, Condor as such was profitable, but that doesn’t mean they had the liquidity necessary to operate.

Condor CEO Ralf Teckentrup had the following to say:

“The 4,900 Condor employees, partners, suppliers and customers thank the German Government and the Hessian State Government for this decision. Condor is a healthy and profitable company, which will also record a positive result in the current year. Because our liquidity for the seasonal weaker winter booking period was used up by our insolvent parent company, we need this bridge financing for the coming winter season. This decision is an important step towards securing our future of our business.”

Condor 767

Condor Flights Operating As Normal

Condor intends to continue operating their full normal schedule, so there should be no disruptions for those booked on them.

A Condor 767 in Whitehorse

Separation From Thomas Cook Through Protective Shielding Procedure

Condor will be filing an application for the opening of a protective shielding procedure to protect themselves from possible claims of their insolvent parent company.

This procedure is a part of German insolvency laws, which can be granted in cases like this. Condor CEO Ralf Teckentrup had the following to say regarding this:

“As a profitable company with a positive cash flow and good business development, we are using the shielding procedure to protect ourselves from possible claims of our former British parent company, Thomas Cook Group plc. In the current situation, this step is the best for our customers, our business partners, suppliers and for us. It gives us full independence from Thomas Cook Group plc and more security for our future. It is a formally necessary and logical step for us. Our business operations continue as planned and we will continue to ensure that our guests reach their destination safely and reliably.”

What’s Next For Condor?

While Condor is profitable independently, they’re obviously in a challenging position as their parent company went out of business. So it does make you wonder if the airline may find new independent investors, or what’s next for the airline.

Earlier this year Lufthansa expressed interest in taking over Condor (really they’d be taking over control of the airline again, since they used to own the airline). I’m curious to see if this situation is what causes that to finally happen.

Condor 767 business class

Bottom Line

Condor is a great leisure airline, and I’m happy to see that it’s business as usual as far as their operations go. This bridge loan guarantee will allow them to avoid liquidity issues. It will be interesting to see if they stay in business independently, or if Lufthansa ends up taking them over.

What do you expect we’ll see in the future from Condor?

Comments
  1. The TC package tour subsidiries in the Nordic countries, as well as Thomas Cook Airlines Scandinavia, are also continuing their operations.

  2. I have my doubts of Lufthansa taking over Condor completely. LH only medium or long haul Boeing is the 747, whereas Condor has old 757 and 767. Not only would maintenance costs be higher, due to the age of the planes but LH would also offer an inconsistent product. Not even Eurowings could use those planes.

    The only things I can see LH having an interest in, is the single aisle aircrafts but more importantly the slots of Condor to grow their own network and to keep competition out.

  3. Not sure a 6-month “bridge loan” secures the future of anything beyond 6 months. How much of Condor’s traffic was driven by TC? If Condor was “independently profitable” is that before or after deducting business fed to it by TC?

  4. @Matt – the bridge loan is important not just because it secures the short-term operations, but gives potential investors more confidence in Condor (and time to review its books thoroughly), which is especially important if the German government decides that acquisition by Lufthansa would result in too much loss of competition.

  5. Flew Condor SEA to FRA on Monday. Everyone at the gate was holding their breath hoping that the FAs and pilots were going to show up. They did and to their credit there wasn’t even a hint of uncertainty on their part. There was no mention of Thomas Cook or financial problems even though half of their promotional materials on board the plane have the TC logo on them. I am not sure I would have held it together so well under those circumstances. Hats off to them.

  6. @Matt:

    That’s a great question. And while that’s good insight from @CraigTPA, the original question still persists: is/was Condor profitable on its own, and will it be able to continue without TC holidaymakers filling planes once the 6 months elapses? I certainly hope so, at least from a market diversification perspective and given the recent spate of European LCCs ceasing operations.

  7. Just a datapoint for those wondering – bookings from TC vacation packages only accounted for approximately 20% of Condor’s bookings.

  8. I have a flight booked with condor in Jan 20 – London Gatwick to Cape Town – It is shown as confirmed on the condor web site but it looks as though they are no longer flying from London Gatwick. Does anyone know whats going on??

  9. So glad the loan got approved. been following the story since Monday. Got a flight SEA-FRA with them next week and would have a difficult time re-arranging everything if they went under.
    BTW – what exactly is a “leisure airline”? I’m taking the flight with them for business purposes.

  10. @JTS

    A “leisure airline” is in general one that flies mostly to holiday destinations rather just large cities.

    Often many of the destinations are seasonal and follow the warm weather, often bucket and spade beach holidays. But can also be nature heavy destinations like Alaska, Whitehorse in Canada or Kilimanjaro.

    Seattle is one of their few non-leisure year round routes, in fact most of their US routes are seasonal. The majority of their routes that goes year round is holiday destinations in the Caribbean or the Indian Ocean.

    Google Condor and check out the Wikipedia page about destinations and you will see what I mean.

  11. The post above is mostly about their long haul network, they do have year round short haul to the Med plus other warm areas close to Europe as well as well.

  12. I have the same issue as @Caroline Saunders. I have a flight booked from Gatwick to Cape Town in January. I contacted condor’s web chat who have said they are unable to confirm the flight at this point in time but a notification will be sent out when they know if the flight will be going ahead.

  13. @Caroline Saunders and @Alex J You might want to check your itineraries again. Condor has never operated flights to the UK, but they have a number of interline and codeshare partners who do. You are definitely booked on another airline between London and Frankfurt, but it’s more a matter of which airline. Generally they use Lufthansa from LHR or LCY for connections from London to Frankfurt.

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