The European Commission has just authorized Germany to loan €380 million to the airline Condor to ensure the orderly continuation of air transport services.
The project of the German government to grant a loan of €380 million to the German airline Condor “is compatible with EU State aid rules” announces the European Commission. These rules “allow Member States to support companies in difficulties, provided, in particular, that the public support measures are limited in time and scope and contribute to an objective of common interest. Rescue aid can be granted for maximum six months to give a company time to work out solutions in an emergency situation”. Following the bankruptcy of the group Thomas Cook, Condor has been confronted to a major treasury crisis, being forced “to write off significant claims against other Thomas Cook Group companies, which Condor will no longer be able to collect”. Hence, Condor’s call for help to the German government which notified to Bruxelles its intention to grant the airline a safety loan worth €380 million via the German public development bank KfW.
To give its approval, Bruxelles has taken into account the following elements: first, “the loan will be paid out in installments under stringent conditions. In particular, Condor has to demonstrate its liquidity needs on a weekly basis and new installments will only be paid when all existing liquidity has been used”; second, “Germany committed to ensure that, after six months, the loan will either be fully repaid, or Condor will carry out a comprehensive restructuring in order to return to viability in the long-term. Such possible restructuring would be subject to the Commission's assessment and approval”. Bruxelles estimated, under these conditions, “the measure will help ensure the orderly continuation of flight services, in the interest of air passengers. At the same time, the strict conditions attached to the loan and its duration limited to six months will reduce the distortion of competition potentially triggered by the State support to a minimum.”