Aviation: Verdict: EU approval of German Condor aid is void

The European Union court has annulled the approval of the multi-million dollar German aid for the holiday airline Condor.

Aviation: Verdict: EU approval of German Condor aid is void

The European Union court has annulled the approval of the multi-million dollar German aid for the holiday airline Condor.

The EU Commission should have initiated a formal investigation, the judges in Luxembourg decided. The German state had rescued Condor in 2019 with a loan from the development bank KfW after the then parent company Thomas Cook went bankrupt.

The judges found that the Brussels authorities had not sufficiently examined whether the aid would guarantee Germany an appropriate share of Condor's future capital gain. But that would have been necessary.

Money does not have to be paid back immediately

The fact that the court has overturned the approval does not necessarily mean that the company has to pay back the money immediately. On the one hand, the ruling can still be challenged before the highest European court, the ECJ. In addition, the EU Commission could issue a new decision under certain circumstances.

"The ruling has no impact on Condor's business situation and flight operations," said a spokeswoman for the company in Frankfurt. The Commission must now carry out the in-depth examination of the aid requested by the court. The aid was about loans in order to continue Condor's flight operations even after the bankruptcy of the former parent company Thomas Cook. There was always a positive continuation forecast for the holiday airline.

With the help of the financial investor and majority owner Attestor, which joined in 2021, Condor is currently modernizing the fleet. The spokeswoman emphasized that the repayment of state aid was going according to plan, without going into details. According to previous statements, the full takeover by Attestor should take place by 2026 at the latest. First of all, the German state is still on board with the trust company “SG Aviation Company”.

The EU Commission as the supreme competition watchdog

With so-called restructuring aid, Germany wanted to support the airline in the form of two write-offs of 90 and 20.2 million euros, which were part of the 321.2 million euro restructuring plan launched in October 2019. The EU Commission, which as the highest competition watchdog ensures that companies do not receive unfair advantages through state aid, approved the project in 2021. The Irish airline Ryanair defended itself against this before the EU court.

The judges now granted Ryanair's application - but only with regard to a violation of procedural rights as part of the necessary review process. The judges made it clear that Ryanair could not object to the legality of the decision. The Irish airline has not demonstrated that its competitive position could be significantly affected by the aid in question and that it is individually affected by the Commission's decision.

Condor was restructured in a protective shield procedure, and at the beginning of 2020 an investor was available in the form of LOT parent PGL. But immediately after the outbreak of the corona pandemic, the Poles jumped ship - and the German holiday airline needed government help again. Condor then averted the threat of insolvency and left the protective shield proceedings on December 1, 2020. A new investor was found in 2021.

Aid for Condor has often been an issue in court

It is not the first time that aid for Condor has been an issue in European courts. An earlier decision by the EU Commission on Corona aid from Germany for Condor was initially overturned by a Ryanair lawsuit. The Brussels authorities then approved the Corona aid again in 2021 - and with it the restructuring aid that was now at issue. However, another lawsuit by Ryanair against a 380 million euro rescue loan for Condor after the Cook bankruptcy was dismissed by the EU court.

The Condor case is one of many in which Ryanair is taking action against state aid for competitors. So far, the Irish airline has been successful in some cases but not in others. Condor and Ryanair had successfully sued together last year against the German Corona financial injection for Lufthansa, which Lufthansa has long since repaid. In this case, a ruling by the European Court of Justice (ECJ) is still pending.