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German Holiday Companies Condor and TUIfly Mull Merger
There are reportedly plans for the formation of a joint venture between Condor and TUI fly Deutschland, according to local outlet Boersenzeitung, citing sources with knowledge of the matter. According to the report, the driving force for the merger of the two state-supported carriers comes from local and national politicians.
Condor is currently flying under a protective shield of the federal government. Having experienced severe turbulence due to the insolvency of its parent company Thomas Cook, the German holiday airline initially received 380 million euros ($447 million) in government aid and then another 294 million euros after a planned takeover by the Polish airline LOT failed due to the ongoing coronavirus crisis.
German holiday airline TUI fly Deutschland, owned by the travel and tourism giant TUI Group, also received government loans of over 1.8 billion euros and is weighing to apply for further cash injections.
In 2008, a merger between Condor, TUIfly and the Lufthansa subsidiary Germanwings failed. Additionally, several attempts to merge Condor with Air Berlin, which filed for insolvency and ceased operations in 2017, also failed. Hit hard by the coronavirus crisis, TUIfly and Condor are currently planning drastic fleet reductions. While TUI fly Deutschland is planning to reduce its fleet from 39 aircraft to 17 aircraft, Condor is slated to slash its fleet of 53 aircraft by up to 25%.
Condor Says Acquisition Not A Near-Term Option
Ralf Teckentrup, CEO of Condor, has recently said that there will not be a new buyer for Condor in the short term.
“In the current crisis nobody thinks about takeovers,” he said. “I therefore think that we will start a new sales process at the end of next year at the earliest and be able to present a buyer at the earliest in 2022.”
In January 2020, it was announced that LOT Polish Airlines would acquire Condor. The acquisition, which was expected to be completed by April 2020, fell through when LOT announced that it had withdrawn from the purchase. Although the selling process ended up in disappointment, Teckentrup did not close the doors to the Warsaw, Poland-based airline, giving the green light to a second attempt from the Polish flag carrier.
“I would even give LOT a second chance,” said the chief of the airline.
Even though the Frankfurt, Germany-based airline’s chief welcomes a takeover by German flag carrier Lufthansa, he stated that it will be less likely due to the veto of the national competition board.
“A new sales process probably won’t start until the end of next year at the earliest,” the CEO said.
The boss of the airline said that Condor itself would not want to increase prices even as costs would rise across the aviation industry. According to Teckentrup, prices should continue to stay at the level of the previous year as the charter airline benefits from the fact that the airline has less cost pressure than its competitors. However, he thinks that may not be possible given the current environment.
“We will have lower income and higher costs and have to repay state aid. Average ticket prices will rise,”stated Teckentrup.
Condor resumed flight operations during the summer holidays, starting servicefrom eight German airports to 29 destinations in Europe, specifically Greece, the Balearic Islands, the Canary Islands and Antalya. This corresponds to approximately 30% of the airline’s originally planned flight schedule.
Teckentrup described the bookings for the summer as satisfactory, but far below previous years. Condor offers flexible rebooking conditions and flight credit for the customers who have to cancel their bookings due to coronavirus pandemic.
Prior to the current crisis, Condor operated scheduled flights to 81 leisure destinations in Europe, North America, Africa and South Asia. The airline, which has 51 aircraft in its fleet, has approximately 4,500 employees. The airline previously announced it would cut up between 15% and 25% of its workforce in a bid to reduce costs in the midst of novel coronavirus pandemic.
“Like other airlines, we will have to cut about 15% to 25% of jobs. That would be between 650 and 1,000 jobs,” Teckentrup said in an interview with German media outlet Frankfurter Allgemeine Sonntagszeitung.
The airline will also move to a smaller headquarter to save approximately 1 million euros per month. The head of the airline also estimated that the crisis in the aviation industry caused by the coronavirus pandemic will continue until 2024. The charter airline previously received 1 billion euros in financial aid from the government to survive.
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