Condor Takeover Is Officially Dead As LOT Parent PGL Holding Walks Away From The Agreement

Late January I wrote about how LOT Polish Airlines proved to be successful in their bid to acquire Germany’s Condor but this deal is now officially dead as the Polish holding has cancelled their plans.

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

It was already 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.

Two weeks ago I first wrote about this issue when it became public that PGL Holding, the parent company of LOT reportedly had second thoughts about the takeover.

Sueddeutsche Zeitung (access here – in German) now reported that this deal is officially deal and Condor is seeking an additional 200 Mio Euro from the state owned KfW Bank. No details have so far been divulged about how the future would look like.

Condor received the initial loan in fall of 2019 after the well documented collapse of the Thomas Cook tourism empire of which Condor was a part.

The airline has always been profitable, especially due to lack of competition in the German market for holiday flights following the demise of Air Berlin. As such getting capital from the KfW Bank wasn’t really in doubt. In fact Condor to this day hasn’t even spend all of that money but the entire loan is due for repayment in a few weeks. Now management and political supporters are scrambling for a solution to keep Condor on life support and have them fly back into regular operations (and profits) following the resolve of this Coronavirus situation.

PGL Holdings was 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 been highly unlikely from the get go that Germany would agree to this both on a federal and local level so it comes to no surprise that this deal fell through.

Conclusion

As PGL walk away from the already signed contract there are severe penalties due, likely to be pursued in court. If any money will ever be paid or recovered remains to be seen. LOT itself has grounded it’s fleet due to COVID-19 and is receiving government support.

Condor has repatriated German citizens through charters from the Foreign Ministry over the last few weeks, going to some pretty exotic places. Now that these flights have been completed the fleet will likely stay on the ground until further notice.

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