European Commission Investigates Germany’s €321.2 Million Aid to Condor

The European Commission has initiated an in-depth investigation into Germany’s EUR 321.2 million (USD 347.5 million) restructuring aid for Condor (DE, Frankfurt International), questioning its compliance with EU state aid rules. This scrutiny follows a May 8 ruling by the European General Court, which annulled the Commission’s initial approval granted in July 2021, marking a victory for Ryanair in its challenge against the decision.

The aid in question was part of Germany’s efforts to assist Condor in recovering from its September 2019 insolvency, triggered by the bankruptcy of its parent company, Thomas Cook Group. The package included a EUR 90 million (USD 97 million) debt write-off and a restructuring of repayment terms on a EUR 550 million (USD 595 million) public loan extended by the German development bank KfW. Additionally, EUR 20.2 million (USD 21 million) in interest was also written off.

The General Court’s decision highlighted the Commission’s failure to assess whether Germany had received adequate compensation for the debt write-offs and stressed the importance of evaluating the proper burden-sharing by Condor’s former shareholders and debt holders.

In response, the Commission stated that its renewed investigation would focus on ensuring that additional burden sharing was executed and that there was a reduction of moral hazard. These measures are to verify the necessity and adequacy of compensatory steps taken in favor of Germany.

Despite the ongoing legal and financial scrutiny, a spokesperson from Condor expressed confidence that the investigation would conclude favorably and that the aid’s approval would ultimately be reaffirmed. She reassured that the airline’s operations and business situation remain unaffected by the judgment or the ensuing investigative proceedings.

“The General Court largely dismissed Ryanair’s complaints except for one crucial aspect—that the Commission should have conducted a more thorough examination rather than approving the aid after a preliminary review,” the spokesperson added. This aspect concerns the extent of the state’s participation in Condor’s future value gains, which is the main focus of the Commission’s re-examination. The spokesperson emphasized that the judgment did not permanently negate the aid but called for a more detailed investigation into the state’s involvement in Condor’s anticipated financial growth.

This development underscores the complex interplay between national interests and European Union regulations, highlighting the meticulous scrutiny involved in state aid cases within the EU framework.

Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com