Polish Aviation Group, the parent company of LOT Polish Airlines, has acquired Condor, Thomas Cook’s German airline, for an undisclosed fee.
The company said that it would expand Condor beyond Germany and introduce it to other markets in Europe.
It is thought that LOT beat private equity groups Apollo Global Management and Greybull to the winning bid. The deal is expected to be completed by April after approval from competition regulators.
The combination of LOT and Condor will create a European aviation group carrying about 20 million passengers per year. Condor operates more than 50 planes, while LOT has a fleet of 80 aircraft, with LOT CEO Rafal Milczarski commenting that he would like to order around 30 more.
Ralf Teckentrup, CEO, Condor, said: “We are pleased that Condor, Germany’s most popular leisure airline, has gained in PGL and LOT stable, experienced and dynamically developing partners who secure the future of our business. Together we will serve twice as many passengers, thus forming one of the largest aviation groups and the leading leisure airline group in Europe. Our partners and customers can safely plan their holiday flights with Condor.”
The bridge financing provided by the KfW state development bank and guaranteed by the German Federal Government and the State of Hessen, reported to be around €380m, will be repaid in full as a result of the deal.
Teckentrup said at the time the loan was agreed: “A healthy business like Condor is also in the interest of a properly operating market, because we are not only a significant competitor in the tourism sector, but also important for the competition in the German and European aviation industry.”
Poland’s prime minister, Mateusz Morawiecki told a press conference: “Up until now foreign companies have been taking over Polish precious assets, now it is the other way round.”
Thomas Cook had a 49% stake in the airline. At the time of its collapse the company had sought state aid from the UK government, but CEO Peter Fankhauser later told a select committee meeting that said that the company only had one meeting with a government minister, adding that, if the government had provided £200m to secure the bailout from Fosun, then the tour company would have been saved.
Earlier this month saw the UK government reportedly offer to allow Flybe to defer Air Passenger Duty payments on UK domestic flights in an attempt to keep the carrier from going into administration. The deferment was thought to amount to around £106m.
The news was described as a “misuse of public funds” by Willie Walsh, outgoing CEO of IAG, in a letter to the government.
Walsh wrote: "Prior to the acquisition of Flybe by the consortium which includes Virgin/Delta, Flybe argued for tax payers to fund its operations by subsidising regional routes. Virgin/Delta now want the taxpayer to pick up the tab for their mismanagement of the airline. This is a blatant misuse of public funds.
“Flybe's precarious situation makes a mockery of the promises the airline, its shareholders and Heathrow have made about the expansion of regional flights if a third runway is built.”
IAG filed a complaint with the European Commission over the government bailout.
Johan Lundgren, CEO, easyJet, added: “Taxpayers should not be used to bail out individual companies, especially when they are backed by well-funded businesses.”
Insight: While the UK government continues to use a roulette wheel to decide which businesses - or, as it might like to think of it, jobs - it wants to step in and rescue, hotels served by Condor can step back and take a deep breath as Europe’s airlift looks stable and growing.
Elsewhere this week we discuss the environmental impact of air travel and tourism on a sector which has come under pressure from flight shaming and, with Condor focussing on the leisure sector, it must be aware of the consumer’s shifting view of holiday travel.
Groups such as Easyjet and IAG have now turned their response to their environmental impact into a way to set themselves apart. The newly-saved Condor must prioritise following suit.