The European Commission launched a detailed investigation of its decision in 2021 to grant EUR321 millions in restructuring assistance from Germany to Condor.
The General Court of the EU had annulled the original approval of the bailout in May 2023 citing insufficient assessments by the Commission.
New investigation into bailout conditions prompted by court ruling
In May, the General Court of the EU overturned the Commission’s approval of the aids to the rival airline Ryanair.
The court found the Commission had failed to adequately evaluate whether Germany received a sufficient amount of compensation for their financial support provided to Condor.
The Commission has been prompted by this judgment to review the terms of bailout.
This new investigation is primarily focused on determining whether Condor shareholders and creditors could have shared a greater portion of restructuring costs. If so, this would reduce the burden of financial responsibility for the German government.
The re-evaluation is intended to make sure that the state assistance provided does not distort competition on the market.
Condor’s Response to the Investigation
A spokesperson from Condor responded to the investigation by describing the Commission’s actions as “logical consequences” of the Court’s judgement.
The airline is confident that the investigation will confirm the original decision of authorizing the restructuring assistance.
The investigation is expected to be concluded soon and the Commission should confirm its approval of restructuring assistance.
Condor was in serious financial trouble, exacerbated further by the COVID-19 epidemic. The bailout of 2021 proved to be crucial.
This restructuring assistance was designed to help the airline recover and continue its operation, while also protecting jobs and ensuring connectivity on the German aviation industry.
What is the impact on aviation?
Condor, and other aviation companies in general, could be affected by the outcome of this investigation.
Condor could be forced to pay back the money if the investigation finds that state assistance was unjustified. This would put its financial security at risk.
Condor would receive the support it needs to recover if the approval of aid was confirmed.
Ryanair will be closely monitoring the investigation. The airline has long been vocal in its criticism of government aids to airlines.
Low-cost carriers have consistently claimed that subsidies like these distort the competition and grant unfair advantages to some airlines.
Other EU members states, including airlines will be watching the Commission’s decisions closely. It could establish a precedent in future approvals of state aids as well as for the scrutiny that must accompany such measures.
As new information becomes available, this post EU opens an investigation into EUR321M German State aid to Condor Airlines may be updated.
