EU Court Annuls Condor Bailout Amid Procedural Concerns

A Condor Airbus A321 on the taxiway.
MarcelX42, CC BY-SA 4.0, via Wikimedia Commons

The European Union’s General Court has annulled a decision by the European Commission that approved restructuring aid for German charter airline Condor.

The Court ruled that the Commission should have conducted a more thorough investigation before greenlighting the bailout.

In 2021, the Commission approved €321 million in aid from Germany to help Condor recover from the insolvency of its former parent company, Thomas Cook.

In the context of that insolvency, Condor has already benefited from rescue aid which the Commission had approved by a decision of 14 October 2019.

Commission did not Assess Legality

The €321 million in aid aimed to restructure Condor’s operations and ensure its continued business.

However, Irish airline Ryanair challenged this decision, arguing that the Commission hadn’t properly assessed its legality.

The EU General Court agreed in essence with Ryanair. The judgement highlights that the Commission should have initiated a formal investigation. This should have occurred due to potential doubts about the aid’s compliance with EU law.

Specifically, the Court raised concerns about whether Germany would receive a fair share of any future profits from Condor as a result of the bailout.

A Condor Airbus A321 on the tarmac.
Knobi83 (Condor Flugdienst GmbH), CC BY-SA 4.0, via Wikimedia Commons

According to the General Court, the restructuring aid at issue, which is in the form in particular of a partial write-off of Condor’s debt, enhances the beneficiary’s equity position.

The Court pointed out that any restructuring aid that enhances the beneficiary’s (Condor) equity position should be granted on terms that allow the State a reasonable share of future gains in value.

This lack of investigation also casts a shade of doubt on the Commission’s assessment of how the aid would affect competition within the airline industry.

Photo Credit: Condor

Annulment of Bailout Decision

While Ryanair won the case and the Commission’s decision is revoked, the Court clarifies that Ryanair can’t challenge the merits of the aid itself.

In simpler terms, the EU Court says Germany needs to redo its homework on the Condor bailout. The initial approval process didn’t consider potentially relevant issues.

This notably included the question of how much Germany would benefit if Condor becomes profitable again. This raises questions about how the airline industry might be affected.

While Ryanair prompted this review, they can’t argue against the aid itself, only that the Commission needs to properly investigate it first.

Notwithstanding this nuance, today’s decision of the EU General Court effectively.

About Condor

Condor is a German charter airline, established in 1955. It operates as one of the biggest leisure airlines in Europe.

The airline offering flights to sun destinations across the Mediterranean, Africa, Asia, the Americas, and the Caribbean.

Condor boasts a long history, initially starting out with just three propeller planes. Today, their fleet carries passengers comfortably to various holiday locales.

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By Len Varley - Assistant Editor 4 Min Read
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