An in-depth probe into more than €321 million state aid pumped into former Thomas Cook-owned German charter carrier Condor has been opened by the European Commission.
The investigation to assess whether the restructuring measure was in line with EU state aid rules.
The cash injection was initially approved three years ago by the commission under state aid rescue and restructuring guidelines but the decision was annulled by the EU General Court in May.
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Condor filed for insolvency in September 2019 due to the collapse of Thomas Cook Group.
The commission approved €321.2 million in restructuring finance in July 2021 to enable Condor’s return to viability.
This involved a €90 million debt write-off on a state-guaranteed €550 million public loan extended by the German development bank KfW, a restructuring of repayment conditions of the remainder of that loan, and a €20.2 million debt write-off on interest due by Condor in the context of Covid compensation it had received.
But, annulling the decision on May 8, the General Court considered that the commission had not assessed whether Germany received sufficient remuneration for the debt write-offs granted to Condor.
In particular, the court held that the commission “should have assessed whether Germany received sufficient up-sides, which would ensure that former shareholders and subordinated debt holders sufficiently shared the burden of restructuring, in order to reduce the aid amount”.
Ryanair, which brought the court case challenging the commission’s decision, described the intervention in May as “a triumph for fair competition and consumers across the EU”.
Following the judgment, the commission will now “assess whether, and if so, to what extent, further burden sharing, and reduction of moral hazard was possible and required and whether this would have had an influence on the nature and size of the compensatory measures put in place”.
The commission added: “The opening of an in-depth investigation gives Germany, as well as interested third parties, the opportunity to submit comments. It does not prejudge in any way the outcome of the investigation.”
It added that “rescue and restructuring aid is among the most distortive forms of aid, because it intervenes in favour of companies that would otherwise exit the market. The guidelines therefore allow for aid only under strict conditions.”
Condor now operates a fleet of more than 50 aircraft.