The European Commission has approved a €380 million rescue loan to keep Thomas Cook’s German airline Condor flying.
Germany stepped in to prop up the carrier in the immediate wake of the collapse of Thomas Cook last month.
The Commission has now backed the deal under EU state aid rules.
“The measure will contribute to ensuring the orderly continuation of air transport services and avoid disruptions for passengers, without unduly distorting competition in the single market,” it said.
“The Commission found that 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.”
German authorities moved to support Condor – unlike their UK counterparts – via public development bank KfW.
The action was taken as the airline faced “an acute liquidity shortage” following the collapse of parent company Thomas Cook Group.
“Furthermore, Condor had to write off significant claims against other Thomas Cook Group companies, which Condor will no longer be able to collect,” the Commission added.
Its guidelines on rescue and restructuring aid allows 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”.
The Commission said it had taken the following elements into account:
- the loan will be paid out in instalments under stringent conditions. In particular, Condor has to demonstrate its liquidity needs on a weekly basis and new instalments will only be paid when all existing liquidity has been used; and
- 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.
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