Germany Prepared To Take Over Condor
The German government is prepared to take over Condor. It is ready, as a deal for the airline to be purchased by LOT is likely to collapse due to COVID-19.
LOT has approved the purchase of the airline for about 300 million euros $328 million in January. The move was to create a leading European aviation group to accommodate 20 million passengers a year.
However, with aircrafts unable to fly due to travel restrictions, airlines worldwide have grounded most of their fleets. This was further compounded by a plunge in demand caused by the pandemic. And they need government support to survive. This has caused sharp declines in stocks.
Airlines have urged governments to speed up bailouts to rescue the air transport industry. They have doubled their estimate of this year’s revenue losses from the health crisis to more than $250 billion.
Completion of its takeover deal was contingent on certain financial guarantees that the German government deemed unacceptable. No final decision on the airline’s immediate future was taken just yet.
Nationalizing Condor Will only be Temporary
LOT has some issues with the deal financing; however, a government decision is possible as early as this week.
The airline was in talks with all parties involved but has neither made a decision nor given a comment yet. Moreover, PGL and the German economy ministry also declined to comment.
Nationalizing the airline would only be temporary as Germany has planned to restart a sales process. Plans should push through as soon as the travel restrictions in the industry from the coronavirus pandemic end.
Condor was a unit that belonged to Thomas Cook, the holiday company that collapsed in September. A state bridging loan of 380 million euro or $415 million allowed the rescue of the carrier.
In more stock market news, Condor applied for an additional 200 million euros in state aid.
Airlines Face The Deepest Crisis Ever
As COVID-19 continued to spread, commercial flights have stopped. The head of the trade group representing the world’s airlines has called the last few months “its deepest crisis ever.” Stock trading has dived down for the travel industry.
Data which tracks air traffic real-time, reveals a series of sequential and precipitous stoppage in flights in four key regions. Officials have sought to contain the outbreak with travel bans and restrictions.
On March 27, Congress has voted to provide the U.S. aviation industry $58 billion in a coronavirus rescue package. Moreover, Singapore Airlines has also lined up a $13 billion funding package led by state investor and majority stakeholder Temasek.
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