BRUSSELS — The European Commission has approved, under EU State aid rules, Germany’s plans to grant a temporary €380 million loan (about Cdn$553 million) to Condor.
Condor offers direct flights to Frankfurt and beyond from up to five Canadian gateways, including Toronto, Vancouver, Calgary, Whitehorse and Halifax.
The rescue aid “will contribute to ensuring the orderly continuation of air transport services and avoid disruptions for passengers, without unduly distorting competition in the Single Market,” says a statement from the Commission.
On Sept. 25 Germany notified the Commission of its intention to grant, via the German public development bank KfW, a €380 million rescue loan to Condor.
The airline was facing an acute liquidity shortage following the collapse of parent company Thomas Cook Group.
Condor also had to write off significant claims against other Thomas Cook Group companies, which Condor will no longer be able to collect.
The statement notes that the Commission’s Guidelines on rescue and restructuring aid 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.
In Condor’s case, the Commission has taken into account that …
. The loan will be paid out in instalments under stringent conditions. 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; 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.
The Commission added that 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.
