Germany mulls ‘loan’ for Condor, Lufthansa looks on

Bloomberg

The German government is mulling a request for an emergency loan by Thomas Cook Group Plc’s Condor subsidiary as Deutsche Lufthansa AG remains tight-lipped on the fate of a unit it bid for earlier this year.
Germany’s Economy Ministry on Monday said it is assessing Condor Flugdienst GmbH’s request for a bridge loan after its parent company collapsed under a pile of debt. The government in 2017 made a similar loan to Air Berlin Plc to keep the airline flying while Lufthansa considered taking it over. Lufthansa earlier this year bid for Condor but in June said that offer would likely be rejected.
“The federal government is examining the application,” an economy ministry spokesman said in an emailed statement.
A spokesman for Lufthansa declined to comment on Thomas Cook’s bankruptcy.
European airlines are struggling to turn a profit due to the surplus of seats on tourist and business routes. Despite the demise of Air Berlin, Monarch, Wow and several other airlines since the end of 2017, too many planes are still flying to too many places.
While a spokesman for Lufthansa on Monday wouldn’t reveal details of its earlier bid, the airline is unlikely to be interested in the company’s medium- and long-haul jets, which are mostly older than
its own. Condor’s slots would be valuable to Lufthansa, although Chief Financial Officer Ulrik Svensson back in June said an integration with its low-cost unit Eurowings would be “complex”.
That complexity could prove insurmountable as the Cologne-based airline issued profit warnings and is under pressure from investors to turn around Eurowings after years of financial underperformance. Investors also lambasted management for its costly integration of Air Berlin jets.
One option for Lufthansa would be to wait for Condor to go bust and then acquire the airline’s slots from airport operators. The Condor brand would likely also be of value, as the airline is popular with German travellers.
Thomas Cook flew German customers with three different airlines. All three remain airborne for the time being, the company said.
Lufthansa owned Condor before selling the unit to Thomas Cook a decade ago.
Germany’s aviation market is one of the main battlegrounds in a Europe-wide fare war to gain market share. Ryanair Holdings Plc and Easyjet rushed into a vacuum created by the collapse of Air Berlin, forcing Lufthansa into a price war in which the firm’s Eurowings subsidiary has lost hundreds of millions of euros.
This summer has seen heated competition on holiday routes to western Mediterranean destinations such as Spain, after Ryanair added a plethora of flights from Lufthansa’s main Frankfurt hub to the Iberian peninsula.