Brussels re-approves €525mn German state aid to Condor

The European Commission has re-approved Germany’s EUR525.3 million (USD620 million) bailout of Condor (DE, Frankfurt Int’l), after the European General Court rejected an earlier approval following a challenge from Ryanair (FR, Dublin Int’l).

The measures would enable Berlin to compensate the charter carrier for losses directly suffered as a result of travel restrictions imposed due to the COVID-19 pandemic, EC Executive Vice-President, Margrethe Vestager, said in a statement.

The Commission’s new approval comes after Ryanair won an annulment at the European Unions’ General Court of an earlier EC decision. Under its terms, the Commission had approved compensation to Condor for the period March 17 to December 31, 2020, in the form of two loans, with a nominal amount of EUR550 million (USD648.6 million) and an aid amount of EUR267.1 million (USD314.9 million), based on estimates of damages. The new decision was based on the actual damages suffered. Condor would repay anything received in excess of the actual amount, plus interest.

The Irish low-cost carrier has also sought to undo bailouts of Lufthansa, Air France, TAP Air Portugal, and other major EU airlines, mostly without success. Earlier this month the Commission announced it was re-approving aid of EUR1.2 billion (USD1.4 billion) to TAP following a similar challenge by Ryanair. The Irish carrier is also litigating against EUR150 million (USD176.8 million) in state aid granted to Austrian Airlines.

Meanwhile, the EC said it found Germany’s aid package to Condor to be in line with EU state aid rules and to be proportionate of Condor’s losses as a result of COVID-19. The approval was based on three separate EC decisions, comprising two sums of EUR204.1 million (USD240.7 million) plus EUR321.2 million (USD378.8 million) of restructuring support.

In the first decision, the EC approved EUR144.1 million (USD170 million) of loans in compensation for the period March 17 to December 31, 2020. In the second decision, it approved additional compensation of EUR60 million (USD70.7 million) for the period January 1 to May 31, 2021.

Thirdly, the Commission also approved Germany’s EUR321.2 million (USD378.9 million) support for the restructuring of Condor, which started in October 2019 and was envisaged to end September 2023. This involved writing off an additional EUR90 million (USD106.1 million) of existing loans and restructuring remaining loans, as well as writing off EUR20.2 million (USD23.8 million) of interest.

Condor and its new private investor, Attestor, will fund more than 70% of the restructuring. Its creditors have agreed to write off more than EUR630 million (USD743.3 million) of claims. Attestor has committed to inject EUR200 million (USD235.9 million) of equity and to provide a further EUR250 million (USD294.9 million) for Condor’s fleet renewal. The airline has committed to a capacity cap of its fleet during the restructuring period (until September 2023) in order to limit any impact on fair competition resulting from the financial aid, the EC noted.

Ryanair has estimated the total state aid to airlines approved by Brussels since the beginning of the pandemic at more than EUR30 billion (USD35.4 million), including EUR11 billion (USD12.9 billion) to Lufthansa, EUR10.6 billion (USD12.5 billion) to Air France-KLM, EUR3.5 billion (USD4.1 billion) to Alitalia, and EUR1.3 billion (USD1.5 billion) to SAS Scandinavian Airlines, as well as EUR1.2 billion (USD1.4 billion) to Finnair, EUR0.8 billion (USD0.9 billion) to Norwegian, EUR0.65 billion (USD0.7 billion) to LOT Polish Airlines, and EUR0.5 billion (USD0.58 billion) to Air Europa.