The LOT – Condor Takeover Might Be Dead In The Water: Condor Applies For Government Loan Extension

Late January I wrote about how LOT Polish Airlines proved to be successful in their bid to acquire Germany’s Condor but this deal could now be off the table given the Economic climate.

Condor has previously received a 380 Mio EURO bridge loan from the German government which needs to be repaid in April of this year, however the airline has now applied for an extension of said loan.

It’s expected that LOT (PGL Holding) will try to walk away from the deal considering airlines worldwide are in crisis and there is probably a surplus in both aircraft and pilots.

Wirtschaftswoche (access here – in German) reported that Condor is seeking an additional 200 Mio Euro from the state owned KfW Bank. Both parties have so far declined to comment on this.

According to the article PGL Holdings is now seeking guarantees from the German government that would essentially eliminate all risk from the investment for PGL and shift it to the German state. It’s highly unlikely that the parties will agree to this.

Should PGL walk away from the already signed contract there would be severe penalties due, likely to be pursued in court.

Condor is currently in the air repatriating German citizens through charters from the Foreign Ministry, going to some pretty exotic places. Once these flights have been completed the fleet will likely stay on the ground until further notice.

Conclusion

This throws Condor back into a pool of cold water. The carrier can send their staff into short term work and save money but it’s unclear when there will be appetite for tourism flights again. Hopes are that the Corona Crisis is over by the summer so the airline can start to transport people to their holiday destinations again. This isn’t too far off as there is only TuiFly as direct competitor following the demise of Air Berlin.

If the German Government is already taking on more risk then they can just as well keep the airline in Germany and let Lufthansa have it. Take the money from PGL to soften the blow.

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