Thomas Cook subsidiary Condor secures US$420m bridging loan from Germany
GERMANY'S plan to award a EUR380 million (US$420 million) six-month bridging loan to Frankfurt-based Condor, an airline subsidiary of bankrupt Thomas Cook Group, has been approved by the European Commission (EC)
GERMANY'S plan to award a EUR380 million (US$420 million) six-month bridging loan to Frankfurt-based Condor, an airline subsidiary of bankrupt Thomas Cook Group, has been approved by the European Commission (EC).
A Condor spokesperson told New York's FreightWaves: 'Condor will continue to carry cargo during the six-month period and thereafter. Based on the bridging loan received by the German government, Condor has a secured financing throughout the winter. There is no reason why shippers should be worried.'
Condor transported an average of 2,000 tonnes of airfreight per month this year, and aims to raise that monthly volume in 2020, the spokesperson revealed.
The EUR380 million survival package granted to Condor far exceeds the GBP150 million ($193 million) that the UK government refused to offer as a rescue package for the now-defunct Thomas Cook Group. The UK government said that throwing the UK-based leisure and tour specialist company a financial lifeline would set a bad precedent for other struggling companies.
The EC ruled that the Condor loan, granted by the German federal government and the Hessian state government, will keep the carrier aloft without distorting competition in the single European market. Disbursement of funds will be paid out to Condor gradually via German state development bank KfW.
Germany has committed to ensure that, after six months, the loan either will be fully repaid or Condor will carry out a comprehensive restructuring exercise to return to long-term viability, with the restructuring subject to EC assessment and approval.
Condor faces a liquidity shortage after Thomas Cook Group entered into liquidation. Financial support via the bridging loan will provide extra liquidity to the airline as it enters the low-activity winter season. Furthermore, Condor was forced to write off significant claims against other group companies, which Condor will no longer be able to collect.
As part of the deal, Condor will be removed from the joint liability agreement with Thomas Cook, according to the German Economics Ministry, ensuring that assets will not be liquidated.
Condor is likely to start a restructuring programme in December that will include identifying a suitable replacement, either a strategic partner or private equity investor, to replace Thomas Cook Group.