Condor: Ferienflieger flies to Mallorca from eight German cities

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For vacationers, airlines and tourism companies, it is the long-awaited redemption: The travel warnings for Mallorca, Menorca, Ibiza and Formentera have been lifted.

The Federal Foreign Office had barely classified the regions as a corona risk area when airlines such as Eurowings and Lufthansa announced additional flights.

This now also includes Condor.

“The opening of Mallorca is helpful,” says a spokeswoman for the holiday airline, who recently reported on new capital requirements.

This is how money gets into the till.

For Condor, 2021 is practically the third fateful year in a row.

The long-established airline with a fleet of 51 aircraft has already been rescued twice with state guarantees or KfW loans worth millions.

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Now a major new course is emerging for Condor, should flight operations actually continue to ramp up from Easter to summer and should more long-distance flights become possible.

The Condor crisis began before Corona

The entire airline and tourism industry urgently needs income since spring 2020 after horrific billions in losses due to travel restrictions.

The summer season is decisive here.

The flood of bookings for new offers shows just how big the pent-up demand of holidaymakers is.

Eurowings alone wants to offer 300 additional flights to Mallorca for Easter.

Condor then wants to head for the island from eight cities in Germany.

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Condor is a special case, because the crisis phase of the vacationer flyer began before Corona.

The first low hit came in September 2019, when the British parent company Thomas Cook had to file for bankruptcy.

The German holiday airline was able to continue flying through a protective shield procedure and bring holidaymakers home - because the federal government and the state of Hesse granted a guarantee for a 380 million euro loan.

Condor should remain independent

In January 2020, Condor seemed saved because the Polish airline group PGL wanted to get on board.

But then came the corona lockdown in March.

Passenger flights were no longer possible until June 2020 and only a mini-program thereafter.

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The takeover by the Poles failed - Condor needed money again.

The state KfW loan was increased to 550 million euros, a large part of which was used to repay the first loan.

Looking for a new investor during the crisis was pointless.

Therefore, Condor restructured itself fundamentally, negotiated new contracts with the trade unions and thus reduced costs.

At the end of November 2020, the second protective shield proceedings could be lifted.

Until it starts again with the vacation flying on a larger scale, Condor should remain independent.

Holiday flyer announces new need for money

Exactly how things are currently with Condor's finances remains a secret.

In contrast to large airlines such as Lufthansa or Ryanair, Condor is not listed on the stock exchange and does not provide any indicators for the year.

Lufthansa recently pointed out that at the height of the crisis in 2020, one million euros per hour were flowing out of the cash register.

In the meantime, the amount has been throttled to ten million euros per day.

But what about Condor?

A good week before the travel approval for Mallorca, which has now been announced, the holiday airline only sent a brief message that money was needed again.

The reason given was the “delay in the population vaccination and the extended lockdown”, which would “postpone the revival of the demand for vacation flights into the summer”.

Some things are running more slowly than assumed in the planning last April.

Speculation about new donors

For this reason, Condor is currently exploring “possibilities for financial support” and is conducting “constructive exploratory talks”.

Condor puts the pure Corona aid at around 250 million euros, "from which we have been drawing to date".

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When this quarter of a billion could be used up or what the new donors could be called - there is no information.

There is speculation in the industry about whether strategic investors will join or a new KfW loan will be needed.

Condor itself speaks of an airline that has got into distress twice through no fault of its own.

The holiday airline is now a "healthy company with positive future prospects" and an "extremely competitive cost structure".

The number of employees has shrunk from around 5,000 to 4,200.

Risk from overcapacity

Condor recently published some figures in the Federal Gazette.

According to this, sales in the financial year that ended at the end of November 2020 were expected to be 663 million euros, and Condor reported almost 321 million euros pre-tax loss before special items.

According to the original planning, around 26,600 flights should be carried out in the new financial year by November 30, 2021, a decrease of 41 percent compared to 2018/19.

The turnover was estimated at around 950 million euros and even a positive result before taxes of eight million euros was predicted.

This is what the plan adopted last year looked like - even before the vaccination delays.

Condor has no illusions that it will be easier for the holiday airline in the market.

"In the short- and medium-haul market, existing overcapacities represent central risks for the achievable prices and capacity utilization," says the risk report.

Due to the decline in business travelers, the scheduled and low-cost airlines could concentrate more on holiday flights and thus “generate significant additional pressure on prices and capacity utilization”.

This also applies to the long-haul market.

In particular, Lufthansa's new long-haul tourist platform (“Ocean”) announced for this year will operate practically “wing-to-wing”, ie wing to wing, with Condor and could thus trigger price pressure.

Ryanair is suing for state aid

What is certain is that Condor and Lufthansa are on a confrontational course.

In November, for example, Lufthansa terminated a long-term agreement on the use of feeder flights at special conditions effective May 31.

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Condor accuses Lufthansa of exploiting its dominant market position and has lodged a complaint with the Federal Cartel Office.

Not only Lufthansa, but also Ryanair is putting Condor under pressure and wants to give the holiday airline the 550 million euros state aid in the corona crisis, which was approved by the EU Commission in April 2020.

This Thursday there will be a hearing at the European Court of Justice.

Ryanair has so far not been successful with similar lawsuits against airlines in Sweden and France.