Thomas Cook’s German Airline Gets $420 Million State Lifeline
The credit worth 380 million euros ($420 million) must be approved by the European Commission and will be valid for six months.
(Bloomberg) -- German airline Condor’s request for emergency financing was granted by Chancellor Angela Merkel’s government in a bid to get the tourist carrier through the winter after the demise of U.K. parent Thomas Cook Group Plc.
The bridging loan worth 380 million euros ($420 million) must be approved by the European Commission and will be valid for six months, according to the airline, which has around 5,000 employees. Some 240,000 tourists are currently relying on Condor to get back to Germany from vacation, Germany’s Economy Ministry said.
The government is in “constructive talks” with the EU executive on the loan, the ministry said in a statement late Tuesday, adding that Condor should also be protected from Thomas Cook’s creditors. The Commission said Wednesday its in “close and constructive contacts with the German authorities.”
“We are a healthy company, and the liquidity we generated has in the past been buried at the parent company,” Condor Chief Executive Officer Ralf Teckentrup told reporters Tuesday. “This bridge loan will take us through the coming winter. In summer, an airline like us needs no such bridge loan.”
Thomas Cook filed for liquidation in the U.K. on Monday, though some profitable parts of the group are still fighting for survival.
German Brands
The company’s German tour operator Thomas Cook GmbH -- with brands including Neckermann, Bucher and Oeger -- filed for insolvency Wednesday to separate itself from liabilities associated with the liquidation of the parent, a prerequisite for a court-led restructuring. The units are profitable and still have a chance to continue in business, the operator said, adding that a court will appoint an expert to restructure them.
An Economy Ministry spokeswoman said later on Wednesday that the operator has asked for a bridging loan of its own and the request is being assessed by government agencies. She declined to give further details.
Zurich Insurance Group AG is the provider of insolvency insurance for the German business and will pay for hotels and flights as customers are repatriated, travel association DRV said.
Meanwhile, Thomas Cook’s Nordic Ving unit said Tuesday that it and airline Thomas Cook Airlines Scandinavia are not included in the parent’s bankruptcy and continue operations as an independent company. That also applies to other Nordic entities in the Thomas Cook Northern Europe unit, such as Spies, Tjareborg and Globetrotter, Ving said.
Condor operates 59 of the group’s more than 100 aircraft, and Teckentrup said he is hopeful the unit can find a new home. The bridge loan will protect “many” of the jobs at Condor, Economy Minister Peter Altmaier told reporters in Berlin Tuesday.
“Condor is a profitable company, so our decision is based solely on its business, and not on political criteria,” Altmaier said.
The German state of Hesse, where Condor has its headquarter, said it will take on 50% of the risk that the federal government is assuming by providing a state guarantee of 190 million euros.
Air Berlin, once Germany’s second-largest airline, was liquidated in 2017 despite the government stepping in to help with a bridge loan of 150 million euros. The airline’s administrators said his month that the loan had been paid back in full.
“We’re a different case than Air Berlin,” Teckentrup said.
--With assistance from Birgit Jennen, Niklas Magnusson, Aoife White and Arne Delfs.
To contact the reporters on this story: Richard Weiss in Frankfurt at rweiss5@bloomberg.net;Patrick Donahue in Berlin at pdonahue1@bloomberg.net
To contact the editors responsible for this story: Daniel Schaefer at dschaefer36@bloomberg.net, Iain Rogers, Chris Reiter
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