EU approves $419m loan to Thomas Cook subsidiary

Thomas cook subsidiary ‘condor’

Condor shields itself from Thomas Cook as loan emerges from the European Commission. Image via BBC

Condor shields itself from Thomas Cook as a loan emerges from the European Commission. Image via BBC

The European Commission on Monday approved a German bridging loan worth 380 million euros (or 419.3 million dollars) for the charter airline Condor, a subsidiary of British tour operator Thomas Cook.

According to Berlin, the loan, split between the Federal Government and the German state of Hesse, aimed at keeping Condor afloat. The airline planned to extract itself from joint liability with Thomas Cook.

The commission, which acted as the EU’s competition watchdog, approved the loan on Monday after establishing that it would not give Condor an unfair advantage.

“The measure will contribute to ensuring the orderly continuation of air transport services and avoid disruptions for passengers,“ the commission said.

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The commission noted that the six-month loan would be paid in installment under stringent conditions, adding that Condor would have to demonstrate its liquidity needs every week.

However, new installments would only be paid out when the company ran out of money.

It added that Germany had also committed to ensure that the loan was repaid after six months, or else make Condor undergo a comprehensive restructuring to return to long-term viability. The commission noted that these conditions would reduce the distortion of competition potentially triggered by the state support to its barest minimum.

Condor has overall 4,900 employees. The company is now in talks with potential buyers.