The German government is reportedly preparing to take over Frankfurt-based Condor Airlines, since a previous plan for Polish Aviation Group (PGL)—parent company of LOT Polish Airlines—to purchase the carrier appears likely to fall through.
Condor was formerly part of the Thomas Cook Group, prior to that company’s collapse in September 2019, and was rescued at that time by a €380 million (USD $415 million) state bridging loan.
In January 2020, LOT agreed to buy Condor for about €300 million (USD $328 million), combining the leading carriers to create a European aviation group capable of flying over 20 million passengers per year.
However, the unanticipated, unprecedented effects of the current COVID-19 pandemic on the global aviation industry may make the planned takeover impossible. Inside sources told Reuters that PGL has made the completion of this transaction contingent upon certain guarantees to which the German government will not agree.
With most fleets grounded, yoked by strict travel restrictions aimed at containing the coronavirus’ spread, and consumer fears fueling a steep decline in demand, airlines around the world are struggling to stay afloat unless they receive financial aid from their respective governments.
The International Air Transport Association (IATA) lately released a report, which estimates that airlines will lose $252 billion in overall revenue this year as a result of the global health crisis. IATA Director General and CEO Alexandre de Juniac posited that most air carriers will soon go bankrupt without swift government bailouts and has urged the provision of state-funded assistance to prevent the total collapse of the air travel industry.
Just last week, Condor reportedly applied for an extra €200 million (USD $220 million) in state aid in order to maintain operations. At present, no final determination has been reached regarding the imperiled carrier’s immediate future, although sources said that the government’s decision could come sometime this week.
Should Germany end up nationalizing Condor, sources said that its ownership of the airline would only last for a limited time and that Germany would want to restart the sales process as soon as the travel industry rebounds from the coronavirus crisis.
For more information, visit condor.com.
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