Condor Exits Bankruptcy Protection Clear Of Most Debts, Lufthansa Cancels Feeder Agreement

2 Comments

A rare piece of good news for the aviation industry is coming from Germany’s Condor as the airline has just completed the bankruptcy protection process being largely debt free (except for a government loan).

The restructuring does pose some challenges though as for example Lufthansa and Condor are to terminate long term feeder cooperation agreement from June 2021.

While Lufthansa will likely continue to offer feeder flights to Condor connections the airline would have to pay Lufthansa a much higher price for their services, reflecting market rates.

Over the past years we’ve covered Condor and the troubles the airline was in following the bankruptcy of tour operator Thomas Cook. Condor entered their own protective shield under German bankruptcy law (We covered it the last time back in March) and the administrator had his hands full of handling these matters. The airline was on a track for a restart and supposed to be sold to the Polish LOT but then Covid-19 struck, resulting in the sale falling apart and Condor entering.

As N-TV now reports (in German) Condor has completed all these proceedings and left the protective shield at the end of November.

Administrator Lucas Flöther said that the airline has completed the restructuring successfully and is now debt free apart from a loan from the German Governments KfW which is the current lifeline of the company.

According to Flöther the airline is now in a pole position once mass leisure travel will restart. Condor has slimmed down their corporate structure, letting go of 700 employees to a total of now 4200 which have received restructuring contracts that are less lucrative than the previous ones. The company has also moved to new offices away from the pricey real estate at Frankfurt Airport.

Condor CEO Ralf Teckentrup says that the airline is currently running 10% of the capacity that they had in the previous winter with some long haul connections to Cuba, Dominican Republic as well as the Maldives. Some European flights such as to the Canary Islands are also on offer. He says that even the summer schedule of 2021 is very uncertain at this point.

What remains to be seen is the the continuing relationship (or lack thereof) between Lufthansa and Condor.

As mentioned industry sourced have reported that Lufthansa has cancelled the existing feeder agreement with Condor which was based on prorated fares. That means Lufthansa only gets a fraction for these services compared to what they’re realistically worth. This will end as of June 2021.

The reimbursement is measured based on distance of the entire ticket so if you have a long haul flight of 5000 miles and Lufthansa feeds a passenger from Munich to Frankfurt they would only get pennies on the dollar for this feeder. Under the current circumstances it doesn’t make much sense for Lufthansa anymore to keep doing this and they will likely negotiate a new agreement where they are being paid fixed rates per feeder.

Another rather negative development on the loyalty front is that Lufthansa Miles&More will also cease their cooperation with Condor. This means Miles&More members can no longer earn or redeem miles on Condor flights taking some good options off the table.

The remaining option (for now) would be Alaska Airlines Mileage Plan, already my preferred program to credit Condor flights to:

All of this is of course contingent upon Condor being willing and able to actually continue to pay any of the Frequent Flyer Programs for their services. While Alaska MP is great to earn miles I can’t see any Mileage Plan members ever redeeming for Condor so the revenue stream is a one way street (OUT). Hard to see any upside for Condor to keep this going considering their prominent position on the German leisure travel market.

Conclusion

Good to see that Condor has completed this process successfully. I was concerned that we might lose the carrier which has been an institution in Germany for decades. I don’t think there is any family that hasn’t used Condor at one point or the other to take a holiday.

Time will tell about the framework of the airlines operations in the coming years, both in terms of the network as well as the ties to frequent flyer programs.

YOU MIGHT ALSO LIKE