Avis institutionnel52024AS63203
Aide d’État – Allemagne — Aide d’État SA.63203 (2024/C) – Aide à la restructuration en faveur de Condor — Invitation à présenter des observations en application de l’article 108, paragraphe 2, du traité sur le fonctionnement de l’Union européenne
| CELEX | 52024AS63203 |
| Type | Avis institutionnel |
| Date | lundi 16 septembre 2024 |
Résumé IA
La Commission européenne a ouvert une enquête approfondie sur l'aide à la restructuration accordée par l'Allemagne à la compagnie aérienne Condor, afin de vérifier sa compatibilité avec le marché intérieur. Cette procédure formelle d'examen, lancée au titre de l'article 108, paragraphe 2, du TFUE, invite les tiers intéressés à présenter leurs observations sur les mesures notifiées. Pour un professionnel du droit français, ce texte marque le début d'une phase contentieuse potentielle, susceptible d'influencer la jurisprudence sur les conditions de sauvetage et de restructuration des entreprises en difficulté dans le secteur du transport aérien.
Texte intégral
 | Journal officiel | FR Série C |
| C/2024/5533 | 16.9.2024 |
AIDE D’ÉTAT – ALLEMAGNE
Aide d’État SA.63203 (2024/C) – Aide à la restructuration en faveur de Condor
Invitation à présenter des observations en application de l’article 108, paragraphe 2, du traité sur le fonctionnement de l’Union européenne
(Texte présentant de l’intérêt pour l’EEE)
(C/2024/5533)
Par lettre du 29 juillet 2024, reproduite dans la langue faisant foi dans les pages qui suivent le présent résumé, la Commission a notifié à l’Allemagne sa décision d’ouvrir la procédure prévue à l’article 108, paragraphe 2, du traité sur le fonctionnement de l’Union européenne en ce qui concerne l’aide susmentionnée.
Les parties intéressées peuvent présenter leurs observations sur l’aide à l’égard de laquelle la Commission ouvre la procédure dans un délai d’un mois à compter de la date de publication du présent résumé et de la lettre qui suit, à l’adresse suivante:
| Commission européenne |
| Direction générale de la concurrence |
| Greffe des aides d’État |
| 1049 Bruxelles |
| BELGIQUE |
Fax +32 22961242
Ces observations seront communiquées à l’Allemagne. Le traitement confidentiel de l’identité de la partie intéressée qui présente les observations peut être demandé par écrit, en spécifiant les motifs de la demande.
TEXTE DU RÉSUMÉ
Condor Flugdienst GmbH («Condor») est une compagnie aérienne charter allemande établie à Kelsterbach (Hesse). Condor fournit des services de transport aérien à des clients individuels et à des voyagistes à partir des aéroports allemands qu’elle dessert, l’accent étant mis sur le marché des voyages de loisirs. À la suite de l’insolvabilité de son ancienne société mère, le groupe Thomas Cook, Condor a été reprise par un fonds d’investissement privé favorable à la poursuite de ses activités et à son plan d’entreprise.
Le 26 juillet 2021, la Commission a décidé de ne pas soulever d’objections à l’égard de l’aide à la restructuration d’un montant de 321,18 millions d’EUR octroyée à Condor. L’aide visait à soutenir la restructuration et la poursuite des activités de Condor en permettant à celle-ci de surmonter les difficultés qu’elle rencontrait en raison de l’insolvabilité de Thomas Cook, son ancienne société mère.
Par son arrêt du 8 mai 2024 (Ryanair DAC/Commission, T-28/22, EU:T:2024:301), le Tribunal a annulé la décision de la Commission, concluant que la Commission aurait dû éprouver des doutes quant à la compatibilité de l’aide avec le marché intérieur. Le Tribunal a estimé que la Commission n’avait pas examiné si l’aide assurerait à l’Allemagne une part raisonnable de la future valorisation de Condor et que cela pouvait avoir une incidence sur l’appréciation de la question de savoir si les distorsions de concurrence étaient dûment atténuées.
La décision annulée a privé les parties intéressées de la possibilité de formuler des observations sur les aspects qui auraient dû susciter des doutes. La présente décision a pour effet d’engager la procédure formelle d’examen, qui permettra notamment de déterminer si l’aide à la restructuration procurerait à l’Allemagne une part raisonnable de la future valorisation de Condor et, à cet égard, si les distorsions de concurrence ont été dûment atténuées.
TEXTE DE LA LETTRE
The European Commission wishes to inform the Federal Republic of Germany that, following the judgment by the General Court of 8 May 2024 in case T-28/22 Ryanair v. Commission (1) annulling the Commission Decision C (2021)5729 final of 26 July 2021 on the aid referred to above and having re-examined the information supplied by your authorities on the matter, it has decided to initiate the procedure laid down in Article 108(2) of the Treaty on the Functioning of the European Union («TFEU»).
1. PROCEDURE
| (1) | Following pre-notification contacts (2), by SANI notification of 23 July 2021 completed on 25 July 2021, Germany notified its intention to grant restructuring aid to Condor Flugdienst GmbH («Condor») pursuant to Article 108(3) TFEU. |
| (2) | On 14 October 2019, the Commission had approved on the basis of Article 107(3)(c) TFEU rescue aid for Condor within the meaning of the Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty («R&R Guidelines») (3). The rescue aid took the form of a EUR 380 million rescue loan from the German public development bank Kreditanstalt für Wiederaufbau («KfW») backed by a State guarantee, with a maturity of six months from the date of disbursement of the first instalment (4). |
| (3) | On 26 April 2020, the Commission had approved prospective damage compensation that Condor was expected to incur in the period from 17 March 2020 to 31 December 2020 on the basis of Article 107(2)(b) TFEU («the annulled damage compensation decision»). The aid instruments were two loans from KfW for a total amount of EUR 550 million backed by a State guarantee (5). Condor used part of the loan to reimburse the rescue loan within six months from the date of disbursement of the first instalment. On 9 June 2021, the General Court annulled the damage compensation decision of April 2020 and suspended the effects of the annulment for two months pending the adoption of a new decision by the Commission (6). |
| (4) | The Commission reassessed the damage compensation in light of the judgment of 9 June 2021 and adopted on 26 July 2021 a new decision regarding the damage compensation for the period from 17 March to 31 December 2020 («the Condor I decision») (7).On the same day, the Commission adopted another decision regarding damage compensation for Condor for the period from 1 January to 31 May 2021 («the Condor II decision») (8) and a decision approving the restructuring aid notified by Germany in favour of Condor («the 2021 restructuring aid decision») (9). Germany granted the restructuring aid on 27 July 2021. |
| (5) | Ryanair DAC brought an action for annulment of that decision, and in the 2024 Condor judgment, the General Court found that the Commission should have had doubts justifying the initiation of the formal investigation procedure under Article 108(2) TFEU and annulled the 2021 restructuring aid decision for that reason. |
| (6) | In the Condor I decision, the Commission had assessed Condor’s damage during the period from 17 March to 31 December 2020 based on ex post figures of actual damage and concluded that Condor had suffered a damage within that period of EUR 175,35 million. In the Condor II decision, the Commission had found that Condor had suffered a damage of EUR 73,66 million during the period from 1 January 2021 to 31 May 2021 and approved aid to partly compensate Condor for that damage in the form of a EUR 60 million write-off from the EUR 550 million loans. The calculation for the period between 17 March 2020 and 31 May 2021, described in the Condor I and Condor II decisions, had resulted in the aggregate actual damage amount of EUR 249,02 million. |
| (7) | In the annulled damage compensation decision, the Commission had approved aid, which Condor was subsequently granted, to compensate prospective damages of EUR 276,7 million. Recital 44 of that decision recalls that Germany committed that it would recover from Condor any over-compensation based on an ex-post calculation of the actual damage suffered, including interest. According to recital 24 of the Condor I decision, the over-compensation amounted to 91,74 million. In addition, Condor had to pay interest for the advantage it got through the overcompensation in an amount of EUR […] million and outstanding interest still due in an amount of EUR […] million. Recitals 24 and 25 of the Condor I decision describe how the claw-back mechanism provided for in the annulled damage compensation decision would be implemented based on the ex post calculation of the damage. |
| (8) | The 2021 restructuring aid decision had approved Germany’s plans to support the restructuring plan of Condor by means of the following measures: (i) a modification to the terms and a partial further write-off of the KfW loans for an amount of EUR 90 million; and (ii) a EUR 20,2 million write-off of the interest for the advantage received from the overcompensation and of interest still due, based on the initial loan agreement, which Condor would have had to reimburse (see recital (7)). The decision had found that the measures involved restructuring aid in the amount of EUR 321,18 million, consisting in the part of the EUR 550 million loan not representing COVID-19 damage, namely EUR 300,98 million, plus the EUR 20,2 million of interest written-off mentioned in point (ii). The assessment of the compatibility with the internal market of the restructuring measures was separate from the assessment of the damage compensation measures, based on different legal bases and eligible costs. |
| (9) | Germany exceptionally agreed to waive its rights deriving from Article 342 TFEU, in conjunction with Article 3 of Regulation 1/1958 (10), and to have the present decision adopted and notified in English. |
2. DESCRIPTION OF THE MEASURES
2.1. The annulment of the 2021 restructuring decision
| (10) | The present decision assesses the compatibility of State aid involved in two measures notified by Germany and approved by the 2021 restructuring aid decision, which was subsequently annulled by the General Court. |
| (11) | Ryanair’s action for annulment of that decision relied on 10 pleas in law, alleging, in essence: (i) that the measure at issue falls outside the scope of the R&R Guidelines; (ii) a manifest error of assessment with regard to demonstrating market failure and social hardship; (iii), (iv), (v) and (vi), that the Commission failed to establish, respectively, the need for State intervention and its incentive effect, that the restructuring plan is realistic, coherent and far-reaching and is suitable to restore Condor’s long-term viability, and the appropriateness or proportionality of the aid at issue; (vii) that the Commission erred in its examination of the negative effects of the measure at issue; (viii) infringement of the principles of non-discrimination, the free provision of services and free establishment; (ix) infringement of its procedural rights; and (x) breach of the duty to state reasons. |
| (12) | The General Court dismissed pleas (i) to (viii) as inadmissible, finding that Ryanair had not demonstrated that it was individually concerned by the contested decision within the meaning of Article 263 TFEU and it therefore did not have standing to challenge that decision on the merits. The General Court admitted Ryanair’s ninth plea, finding that the applicant was a party concerned for the purposes of Article 108(2) TFEU and an interested party within the meaning of Article 1(h) of Council Regulation (EU) 2015/1589 and that it therefore had standing to bring proceedings in order to protect its procedural rights. Within that plea, the applicant raised eight items of evidence, corresponding to its pleas (i) to (viii), to substantiate its claim that the Commission’s examination of the measure at issue was insufficient and incomplete, which showed that serious doubts as to the compatibility of the measure with Article 107 TFEU persisted and should have prompted the Commission to open the formal investigation procedure under Article 108(2) TFEU. |
| (13) | The General Court recalled that, according to settled case law, when the Commission’s preliminary examination of an aid measure has not enabled it to overcome the serious difficulties involved in assessing the compatibility of that measure, the Commission was under a duty to initiate the procedure provided for in Article 108(2) TFEU and had no discretion in that regard. The General Court then proceeded to examine Ryanair’s items of evidence and dismissed the applicant’s pleas (i) to (v), as unfounded. Among others, the General Court confirmed the Commission’s view that the assessment of the compatibility with the internal market of the restructuring measures was separate from the assessment of the damage compensation measures, based on different legal bases and eligible costs. The General Court held in particular in paragraph 133 of the 2024 Condor judgment that it was apparent from recital (131) of the 2021 restructuring aid decision that «a share of the COVID-19 loans of 2020 served to cover the exceptional costs incurred by Condor in the COVID-19 pandemic, and which therefore do not constitute restructuring costs included in the restructuring plan, while the remaining portion of those loans funded the restructuring, with the addition of the sum corresponding to the second part of the measure at issue». |
| (14) | The General Court then examined the applicant’s pleas (vi) and (vii), challenging the Commission’s assessment of the proportionality of the measure and of its negative effect on competition and trade. In that respect, the General Court found that the Commission should have had doubts, first, as to whether the measure at issue satisfied the requirement of adequate burden sharing set out in point 67 of the R&R Guidelines and, second, whether the scope of the measures to limit distortions of competition complied with the requirements set out in particular in Section 3.6.2.2 of those guidelines. According to the General Court, these doubts rendered the Commission’s preliminary examination incomplete and insufficient, which in turn constituted evidence of the existence of serious difficulties. |
| (15) | This led the General Court to conclude that the Commission should have had doubts justifying the initiation of the formal investigation procedure under Article 108(2) TFEU and to annul the 2021 restructuring aid decision on 8 May 2024. Finally, the General Court held that it was not necessary to examine the item of evidence 8 presented by Ryanair, nor its plea (x). |
| (16) | The Commission did not appeal the General Court’s judgment and is now reassessing the measures in light of that judgment. |
2.2. The measures
| (17) | In the following section, the measures and their context are described at the time when they were granted (i.e. in July 2021). The assessment of the measures, following the annulment of the 2021 restructuring aid decision, must be based on the facts and elements prevailing at the moment of granting. As a result, the financial and commercial data refer to the period up to the financial results of 2019, as the last year of normal business operations before Condor entered insolvency proceedings and before the restructuring aid was granted, as the year 2020 was heavily affected by the COVID-19 pandemic and was thus not considered to be representative. |
| (18) | The first measure consists in the modification of the conditions - described in recitals (44) and (45) - of the EUR 550 million KfW loans that had been granted to Condor pursuant to the annulled damage compensation decision, to the extent that the modified loans and the EUR 90 million write-off support Condor’s restructuring plan and are not compensating it for damages related to COVID-19 (Measure 1). The second measure consists in the waiver and write-off of EUR 20,2 million interest due that Condor would have had to reimburse as a result of the Condor I decision (Measure 2). |
| (19) | The two measures are part of a financial package negotiated between Germany, Condor’s new private shareholder Attestor Limited (Attestor) and KfW with a view to supporting the restructuring and continuation of Condor’s business. |
2.3. The beneficiary
2.3.1. Corporate structure, ownership and activities
| (20) | The beneficiary of the measures is Condor and its controlled subsidiaries (see recital (33)). Condor is a German charter airline, headquartered in Kelsterbach (Hessen). It provides air transport services to individual clients and tour operators from its airports in Germany, with a focus on the leisure travel market, to 126 destinations all over the world. In 2019, its turnover was EUR 1,7 billion, with a balance sheet total of EUR 7,2 billion and it had 4 022 employees (11). |
| (21) | At the time of the notification, SG Luftfahrt GmbH (SGL) was the sole shareholder of Condor. SGL is a holding company without operational activities. It held Condor’s shares in trust since Condor exited insolvency proceedings in December 2020 (see recital (29)), pending its sale to a strategic investor (12). SGL is wholly owned by Team Treuhand GmbH, which is in turn wholly owned by Noerr & Stiefenhofer. SGL has been created solely to hold the shares of Condor pending its sale to Attestor and will be liquidated once all shares are sold (see recital (33)). According to the (draft) purchase agreement SGL is prohibited until the day of enforcement of the agreement from acting in a way that a majority shareholder could normally act when exercising his rights. The prohibition includes actions such as the dissolution of Condor, conclusion, termination or cancellation of company agreements within the meaning of paragraphs 291 et seq. of the German stock corporations act (AktG) (13), a capital increase or decrease, amendments to the articles of association of Condor’s subsidiaries, the distribution of dividends, the transfer of profits, the advance payment on profits, the collection or repurchase of shares, disposal or encumbrance of material assets (with exceptions), material investments above EUR 2 million per month (in total), conclusion, amendment or termination of (including new) financing agreements, including aircraft leasing contracts, or the appointment of a director, or member of the supervisory board. Figure 1 shows the structure of the Condor group before the execution of the agreement negotiated with Attestor (see footnote 14 and recitals (32) and (33)). |
Figure 1
The structure of the Condor group
| Source: | KPMG, Condor Flugdienst GmbH, German Restructuring Concept according to IDW S6/ BGH, 16 June 2021, p. 22 |
| (22) | As a charter airline, Condor provides services to tour operators and travel agencies. Condor also sells flight seats directly to end customers, for example via the internet (so-called «dry seats»). Condor serves short-medium and long-haul routes and also flies to airports that are not served by scheduled airlines (14). |
2.3.2. Competition on the markets Condor is active on and position therein
| (23) | Concerning charter companies, Condor mainly faces competition from TUIfly, the airline of the TUI group, on routes from Germany to tourist destinations, such as Spain, Greece, Italy or Portugal, the Caribbean or Mexico (15). Some routes operated by Condor are also operated by Eurowings, the low cost carrier of the Lufthansa group (16), or Ryanair. However, Condor potentially competes with such airlines only as regards its dry seat sales on charter flights to certain destinations that those airlines also serve. |
| (24) | According to the German authorities, Condor is - alongside Eurowings - the only provider of direct long-haul leisure flights departing from Germany. In summer 2019, Condor served a total of 126 destinations, out of which 35 long-haul destinations. On long-haul destinations, Condor was the sole supplier on 63 % of the routes, while 29 % were served by Condor and one other airline, and on 8 % more than two airlines were present. In the short and medium haul segment, Condor was the sole supplier on 25 % of the routes it served in summer 2019; on 32 % of them two airlines were present and 43 % of those routes were served by more than two airlines. |
| (25) | In 2019, Condor’s fleet included […] aircraft – two of which were operated by Brussels Airlines - in total. Condor carried out around 45 400 flights carrying around 9,4 million passengers, with a total of available seats per kilometre («ASK») of […] million and a load factor of 90 % of the aircraft operated. In summer 2019, Condor had a market share of air passenger transport in Germany of 6,4 %, which placed it third after Lufthansa (37 %) and Eurowings (8 %), which are both owned by the Lufthansa Group. Ryanair had a share of 5 % and TUIfly of 3 %. In the leisure air travel segment, the Lufthansa Group is also the leading operator with a share of 31 % (Lufthansa and Eurowings), while Condor and Ryanair have 16 % each, followed by TUIfly with 9 %, SunExpress with 7 % and EasyJet with 4 %. |
| (26) | In 2019, Condor operated charter flights at nine German airports with four core airport bases in Hamburg, Düsseldorf, Munich and Frankfurt (17). Considering the whole German air transport passenger business, Condor holds 3 % in terms of frequencies, 4 % of capacity and 6 % of ASK. In terms of frequencies, among the individual airports it serves, Condor exceeds 10 % only in the airport of Leipzig. The second highest proportion is in Hanover, with 8 % of frequency, 11 % of capacity and 18 % ASK. The greater share of total capacity and ASK by Condor in some airports is due to Condor using larger aircraft and operating longer routes than those of domestic or continental airlines carrying business passengers on short distances. Leipzig and Hanover are also mainly regional airports that are not congested and where there is no shortage of available slots for airlines using them. In all other airports it serves, Condor has often less than 5 % of share of the total frequencies, capacity and ASK (18). |
2.4. Condor’s financial difficulties and search for a strategic investor
| (27) | The financial performance of Condor on a stand-alone basis was positive before the COVID-19 pandemic. Condor mainly earned recurrent annual profits since 2009, amounting to EUR 530 million cumulated and an annual average of EUR 44,1 million over the past twelve years (Table 1) (19). Condor has thus prima facie a functioning and profitable business model. Table 1 Condor’s profits / losses from 2008 to 2019
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| (28) | However, Condor’s financial situation was and remained at the time of granting the aid negatively affected by the insolvency of its former controlling shareholder, the Thomas Cook Group (TCG). Condor participated in the cash-pool of TCG, had receivables of around EUR […] million against TCG and no bank funding (20). With the insolvency of its parent, Condor could not fund its liquidity needs on the market and had to file for insolvency under self-administration in September 2019 (21). |
| (29) | On 1 December 2019, the Insolvency Court Frankfurt am Main opened the insolvency procedure and authorised Condor to continue its business, while drawing up an insolvency plan. The insolvency court considered that Condor was fundamentally an operationally profitable company whose need for restructuring was not triggered by shortcomings of its own business model and profitability, but by the insolvency of TCG. The insolvency plan set out the measures for the continuation of the business model as a provider of leisure flights, an agreement with its creditors, restructuring measures and the entry of a new investor. The main element of the plan was the operational and financial unbundling of Condor from TCG, as well as the takeover by a new investor. Condor’s shares held by TCG were fully written-down to zero and new shares of a value of EUR 20,2 million issued to a trustee (SGL, see recital (21)), whose purpose was to hold them until a new investor was found. |
| (30) | Three offers for the purchase of Condor were submitted in January 2020. Those offers valued Condor at between EUR […] and EUR […] million. PGL, the parent company of LOT Polish Airlines, was the successful bidder offering a purchase price of EUR […] million (22). The purchase agreement with PGL including the notarial requirements was signed on 24 January 2020. On 24 February 2020, the German Federal Cartel Office (Bundeskartellamt) authorised the merger. In March 2020, Condor’s creditors’ committee adopted the insolvency plan by the required majority and the insolvency court approved it. However, on 13 April 2020, PGL withdrew from the agreement as it experienced financial and economic difficulties related to the COVID-19 pandemic, resulting in LOT Polish Airlines requiring approximately EUR 650 million support from the Polish Government (23). |
| (31) | The withdrawal of PGL prolonged Condor’s insolvency procedure for seven months. The prolongation triggered additional costs for which Condor was liable for an amount totalling around EUR […] million (24). On 22 October 2020, Condor’s creditors’ committee approved an amended plan that the insolvency court endorsed on 24 November 2020. On 30 November 2020, the insolvency court pronounced Condor’s exit from insolvency. |
| (32) | Condor continued searching for an investor and underwent another bidding process. Among the three offers received, Condor’s Supervisory Board, whose shareholder members are representatives of the German Federal Government and the Land of Hesse (the guarantors of the KfW loans), has selected the private investment fund Attestor. Attestor offered the best conditions for Condor and for the repayment of the public loans of KfW backed by public guarantees. A notarial act of 20 May 2021 recorded the planned purchase. |
| (33) | According to the draft purchase agreement, Condor’s shares in its subsidiaries Berlin Lufttransport and Internationale Lufttransport would be sold to the holding company SGL, Attestor would take over 49 % of Condor’s shares from SGL, while 2 % would be held by a trust company on behalf of Attestor. Attestor would have an option to acquire the remaining 49 %. In line with the agreement, Attestor controls 51 % of Condor’s shares since 28 July 2021 (49 % via an investment fund managed by Attestor and 2 % via a trustee) and provided equity as agreed (see recital (40). The financial terms for the transaction involve financing the business plan of Condor and the restructuring of existing public loans provided to Condor on the terms described in recitals (44) and (45). The ownership structure of Condor after the transaction is shown in Figure 2: |
Figure 2
Ownership structure of Condor after its sale to Attestor
| Source: | KPMG, Condor Flugdienst GmbH, German restructuring concept according to IDW S 6/BGH, 16 June 2021, p. 51 |
2.5. Condor’s restructuring plan
| (34) | Condor began implementing the restructuring plan in October 2019, when it started a rationalisation and restructuring programme running until September 2023. The plan is based on three main components: (i) cost and efficiency gains through rationalisation and fleet renewal; (ii) financial and capital restructuring through private funding from Attestor and the renegotiation of the KfW loans and (iii) organisational stabilisation through the entry of a strategic partner. |
2.5.1. Operational and organisational restructuring
| (35) | Condor has launched a programme of rationalisation, commercial optimisation and productivity improvement, in order to reduce operating costs and to maintain and further enhance its profitability. According to the restructuring plan submitted by Germany, that programme was expected to generate cost and productivity gains as follows: (i) […] % staff reduction by May 2021, comprising in particular a reduction of ground staff workforce […] 17 % despite having taken over a series of tasks formerly handled by TCG, as well as reductions of cabin crew as from 2022 through pre-negotiated social plan measures; (ii) payroll cost reductions through adjustments of collective agreements, management bonuses and salaries, as well as cuts of certain additional payments such as the canteen bonus and the vacation allowance; (iii) move to low-cost headquarters (iv) renegotiation of supplier contracts (during the insolvency proceedings, legal notice and terms periods did not apply, which allowed the termination of unfavourable contracts) and adjustment of aircraft lease agreements; and (v) fleet renewal. The rationalisation programme was expected to result in over EUR […] million of permanent cost reductions per year. |
| (36) | The operational restructuring measures aim to maintain and streamline Condor’s operations until it can generate profits after the gradual phasing-out of flight restrictions imposed to prevent the spread of the COVID-19 pandemic. Their implementation will ensure Condor’s competitiveness through further cost reductions and the necessary fleet renewal with modern fuel-efficient aircraft. |
| (37) | Condor had an ageing fleet, which in summer 2019 included […] planes, of which […] operated directly. In particular, the […] Boeing 767-300 it used on long-haul routes were on average 26 years old, which is above the industry average. The fleet restructuring, which is planned to take place between 2022 and 2025 for long-haul aircraft and between 2022 and 2029 for short- and medium-haul aircraft, will lead to reductions of fuel consumption and CO2 emission. Based on the offers at hand at the moment of granting the aid, Condor expected annual savings in fuel costs of around EUR […] million, savings of between 15-25 % in CO2 emissions and a reduction in average fuel consumption to below 2 litres/100k km/passenger in the long-haul segment alone, where it is replacing […] Boeing 767-300. Table 2 Condor's restructuring measures
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| (38) | Moreover, the entry of the strategic investor has created a stable corporate framework. In particular, the sale of part of Condor’s shares to Attestor was a first step towards Condor’s structural independence, after its exit from insolvency proceedings. In addition, the entry of Attestor and the restructuring of the KfW loans have provided Condor with sufficient financing and enabled the company to strengthen its equity base. |
2.5.2. Capital and financial restructuring and financing of restructuring plan
| (39) | The restructuring costs include the costs of Condor’s fleet renewal as well as its uncovered operating costs during the restructuring period. As such, they include the repayment of the rescue loan and its substitution by other KfW loans, the write-off of interest claim on the over-compensation as set out in recital (7), and EUR […] million of insolvency costs (recital 31). The restructuring costs are being and will be financed partly from own resources, for a total amount of EUR […] million, and partly from public financing in the form of debt restructuring, for a total amount of EUR […] million. The financing from non-public resources will be provided through funds from Attestor and supported by permanent cost savings and debt write-offs resulting from the insolvency plan, broken down as follows. |
| (40) | Attestor has provided EUR 200 million of equity to Condor, in the form of a EUR 150 million injection into the company’s capital reserve, and a EUR 50 million deposit on a notary’s escrow account available to Condor if required for operations. |
| (41) | In addition, Attestor committed EUR [0-250] million for Condor’s fleet renewal as well as a credit line of USD [50-100] million (around EUR [50-100] million), which Condor can draw on in several tranches, without revolving, for pre-delivery payments on aircraft. In particular, [company of the Attestor group] provided a leasing facility to Condor and its subsidiaries, committing directly or via one or more special purpose vehicles equity leasing financing of EUR [0-250] million for the acquisition of aircraft to be leased to Condor. The aircraft financing would be completed with external financing expected to cover, in line with trade practice, between […] % of the total expenditure for aircraft acquisition. The draft leasing commitment would thus enable Condor to lease aircraft worth up to EUR […] million for a minimum of […] years. |
| (42) | Moreover, Condor’s creditors have accepted to write-off claims amounting to EUR […] million in the context of the insolvency procedure. The proceedings were governed by the obligatory legal provisions of standard German insolvency law which explicitly provides for different groups of creditors and their treatment. Within each group, creditors were treated the same. Germany explains that Condor’s creditors’ committee could choose between a liquidation of Condor or accepting an insolvency quote of [under 1] % on claims amounting to EUR […] million in total and several creditors voted against the plan. However, the majority of creditors decided to accept the quote and the creditors’ committee approved the plan on 22 October 2020. The insolvency court endorsed the plan. |
| (43) | Finally, in the context of its rationalisation programme, Condor is achieving permanent cost reductions of EUR […] million per year, deriving from leasing contract adaptations, renegotiation of supplier contracts and adjustment of collective agreements as described in recital (35). They affect the profit and loss account of Condor and reduce the need for external funding. |
| (44) | The purchase agreement and funding for leasing financing from Attestor set as a pre-condition a restructuring of Condor’s EUR 550 million existing loans from KfW. The KfW loans have the following conditions (25):
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| (45) | According to the notification and the draft agreements submitted by Germany, Germany will contribute to the financing of the restructuring plan by restructuring the existing EUR 550 million of KfW loans as follows:
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| (46) | Germany confirmed that the draft agreements have been implemented as described above. |
| (47) | Germany granted the KfW loans to Condor to partly make good the damage the company was estimated to have incurred in the context of the COVID-19 pandemic. After the adoption of the annulled damage compensation decision, the Commission has found that Condor suffered a damage of EUR 175,355 million during the period from 17 March to 31 December 2020 (26) and a damage of EUR 73,66 million during the period from 1 January to 31 May 2021 (27), making a total of EUR 249,02 million during the period from 17 March 2020 to 31 May 2021. The difference between, on the one hand, the amounts of the loans (EUR 550 million) before applying the write-offs (EUR 90 million and EUR 60 million – recitals (6) and (8)) and, on the other hand, the estimated damage during the period from 17 March 2020 to 31 May 2021 (EUR 249,02 million) amounts to EUR 300,98 million. This is the amount of the loans granted for the restructuring. Ryanair had challenged the correctness of that amount in its action for annulment, claiming that only the amount of aid approved under the Condor I and Condor II decisions, namely EUR 204,1 million, should have been deducted from the total amount of the loans. However, the GC rejected that argument as inadmissible, having been raised for the first time at the hearing (28). |
| (48) | Germany submits two evaluations of the aid element contained in the restructuring of the loans. |
| (49) | According to the first approach, Germany submits that the aid element of the loan restructuring would be the nominal amount of the loans of EUR 400 million (that is the original amount of EUR 550 million reduced by the write-off of EUR 150 million) minus the amount notified by Germany as damage compensation aid for the period from 17 March 2020 to 31 May 2021 of EUR 144,1 million, which would result in a nominal amount of restructuring aid of EUR 255,9 million. |
| (50) | However, Germany considers that a less conservative valuation of the aid element would be possible. For the senior tranche of EUR 175 million, the aid element would be EUR 18,9 million of difference between the interest actually paid by Condor and that it would have to pay for a hypothetical market loan. A market lender would also agree to the deferral of repayment and interest, which would thus be free of aid. For the junior tranche of EUR 204,8 million and loan 2 of EUR 20,2 million, Germany considers that the earn-out mechanism will trigger an estimated repayment of between EUR […], so that a default risk of EUR […] million and the interest rate difference on the remaining EUR […] million constitute a conservative valuation of the aid element. Finally, Germany assesses the debt waiver of EUR 90 million as a grant with an aid element of EUR 90 million. |
2.5.3. Operational and financial trajectory of restructuring and return to viability
| (51) | Germany submits that until the COVID-19 pandemic the German outbound travel market was growing constantly with annual increases of up to 4,6 %. However, the market dropped sharply by 58,1 % in 2020. The restructuring plan assumes that demand on the German source market for leisure travel would start to pick up in summer 2021. Germany submits that travel is strongly correlated to GDP, which was expected to return to pre-crisis levels by the end of 2021. The strong increase of the net savings rate of households in Germany from 10,9 % in 2019 to 16,3 % in 2020 suggested strong consumer spending as restrictions progressively lift. Leisure travel was expected to recover faster than general travel and return to pre-crisis levels about a year earlier than general travel (29). |
| (52) | The assumptions in the restructuring plan are based on an analysis of different trends as well as their impact on leisure travel. The restructuring report by KPMG, provided by Germany, also includes forecasts for market development, based on third party assessments (30). Several expert studies covering forecasts of passengers (PAX), RPK (revenue passenger kilometres) (31), IFR (instrument flight rules) (32) movements and numbers of passengers expected a recovery to the 2019 level in 2023 as a best-case scenario (33) for the air travel sector. A first increase was expected in the third and fourth quarters of 2021 if travel restrictions end and vaccinations progress. Those forecasts are used to assess the plausibility of the underlying assumptions of Condor’s business plan. |
| (53) | According to the data provided (Euromonitor data on outbound leisure travel in number of trips and expenditures, Statista and McKinsey data on revenue), the worldwide tourism market was set to recover to 2019-levels in 2022 in the best case scenario and in 2024/25 in the worst case scenario. As shown in Table 3, it is expected that the recovery of key performance indicators («KPIs») PAX, RPK, and IFR will reach 2019-levels around 2023/24. However, those forecasts concern the entire airlines sector. The same forecasts also point to a faster recovery for tourist flights. |
Table 3
Forecasts of airline KPIs in % of 2019
| Source: | KPMG, Condor Flugdienst GmbH, German Restructuring Concept according to IDW S6/ BGH, 16 June 2021, page 33 |
| (54) | The main operating costs of Condor’s business are for maintenance, fuel and staff. The assumptions in the restructuring plan are based on aircraft economics per type on the assigned route, oil price projections and performance. The restructuring plan takes into account effects from measures implemented as part of the insolvency plan, stemming from fleet renewal, a gradual shift from […] as well as staff reductions, COVID-19 related short-term-work, etc. |
| (55) | Condor’s revenues from flight operations are projected to increase gradually. After a ramp-up phase during 2020-2022, aircraft load factors are expected to reach pre-COVID levels in […], in line with the expected recovery of the leisure travel market. In the baseline scenario (Table 4), Condor is expected to become profitable and cover interest charges and depreciation at the end of the restructuring period in September 2023 with net result of EUR […] million and […] % EBIT margin (34). That upwards trend will continue after the end of the restructuring period, with a net result of EUR […] million and an EBIT margin of […] % in 2024 and thereafter reaching a net result of EUR […] million and […] % EBIT margin in 2026. Table 4 Profit and loss account for Condor in the baseline scenario
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