German airline Condor is unlikely to be sold until 2022 at the earliest, according to its chief executive. Polish Aviation Group (PGL), the owner of carrier LOT, pulled out of a deal back in April and has no plans to resume negotiations any time soon.
Condor exec rules out any progress on a new deal
LOT had committed to purchase Condor in January 2020, before reneging on the deal once the COVID crisis emerged. With the future of the industry still uncertain, Condor chief executive Ralf Teckentrup believes any progress on talks to be highly unlikely in the near future. Mr. Teckentrup told reporters,
“I do not see that we will have an investor process in the next 12 months. It is currently not a good time to sell an airline.”
However, he did reveal that a deal is still on the cards, stating “an investor trial will take place in one and a half or two years at the earliest.” Any takeover will heavily depend on when and if the aviation market recovers. If the industry undergoes a rapid recovery then Condor may proceed with a sale much sooner than expected.
What happened to the LOT deal?
Polish airline LOT was all set to takeover Condor before the coronavirus pandemic spread worldwide by March 2020. After a few weeks of speculation, by mid-April LOT confirmed it was pulling out of the deal. The terms of the deal involved PGL paying back a bridging loan provided by the German government in October 2019.
Condor managed to survive after tour operator Thomas Cook went bust due to this loan and received an additional €550 million (US$595 million) in April to keep it afloat. The terms of the LOT deal were agreed on before the most-recent government bailout, which could complicate future talks. Before LOT agreed a purchase, there were two other companies interested in buying Condor – Greybull, a British investment firm, and U.S-based Apollo Global Management.
What now for Condor?
The German carrier is in a precarious position given the state of its finances, although executives are hopeful for the future. Mr. Teckentrup said the airline is operating at just 10-15% of its pre-COVID capacity, but insists it is a “very healthy company” after closing insolvency proceedings this month.
The chief executive remains optimistic, especially with a potential vaccine and improved testing measures on the horizon. Mr. Teckentrup anticipates 60-75% capacity by summer 2021, with the airline even announcing new summer destinations out of its Zurich hub.
With airlines across the world laying off staff, Condor managed to reach an agreement with its staff to avoid workforce cuts in July. The airline has promised it won’t be laying off any staff until December 2021 at the earliest.
Will LOT pursue the deal in the future, or will another company swoop in and buy Condor?