The owner of LOT Polish Airlines has pulled out of a bid to purchase German carrier Condor. In January it was announced that LOT’s owners, PGL, would purchase the German carrier following its split from Thomas Cook last year.
There was much excitement when it was announced that LOT Polish Airlines’ owners would purchase Condor. However, it appears as though things have changed due to the current situation in the aviation industry. According to Reuters, the Polish Aviation Group (PGL) today said that it has pulled out of purchasing the airline.
There had been some whispers within the aviation community that the LOT Polish Airlines Condor deal would be called off due to the current situation in the aviation industry. This has now been confirmed. According to Reuters, a spokesperson from the PGL group said:
“I confirm that PGL informed Condor today about its withdrawal from the purchase of this company. We don’t provide any more information at this stage”
When asked for comment, a Condor spokesperson told Simple Flying:
We can confirm that PGL has informed us that it wishes to withdraw from the purchase. We are currently in discussions with PGL to define possible conditions for a withdrawal. We are also examining how we will assert our claims under the signed purchase agreements. Condor is prepared for this scenario and intends to leave the protective shielding proceedings soon.
There are various options for the future ownership structure, such as a trustee structure. We are also in talks about state aid because of the effects of the Corona crisis. Our flight operations will continue as normal – as far as possible due to the effects of the Corona crisis. At present, we are concentrating in particular on cargo and harvest aid flights in order to contribute to Germany’s basic medical and goods supply.
About the deal
In January we were expecting an airline to announce it would purchase the German carrier Condor, following its breakup with the Thomas Cook Group. On the 24th of January, it came with a little surprise that the group to be taking over Condor would be the Polish Aviation Group.
The purchase of Condor would have cost PGL €300 million, an amount that the group is apparently now unwilling to part with given the current situation facing the industry. This amount would have allowed Condor to repay a bridging loan obtained from the German government. It was previously reported that PLG had made the deal subject to financial guarantees that the German government considered unacceptable.
With the purchase now canceled, what will happen to Condor next? Whether these can be reinstated is unclear. Recently Condor ended its contracts with Thomas Cook Aviation, causing the later to stop flying.
It had been reported that the German government was looking at nationalizing the Frankfurt-based carrier. However, on this matter, a spokesman for Germany’s economic ministry declined to comment, according to Reuters. This nationalization was reportedly an option because it looked as though the deal would collapse.
According to our earlier reporting on the matter, any nationalization would be a temporary measure until the current crisis was over. Following this, the sales procedure would be restarted. Given the current situation, one would imagine that it would take quite some time before airlines are looking to expand once more. Most are currently in full cost saving mode, with some thinking recovery will take many years.
What do you make of the news that PGL is withdrawing from the purchase of Condor? Let us know what you think and why in the comments below.