EU opens investigation into €321 M German state aid for Condor airline

The European Commission has launched an in-depth investigation into its 2021 decision to approve €321 million in restructuring aid from Germany for the airline Condor.

This move comes after the General Court of the EU annulled the initial approval in May 2023, citing an insufficient assessment by the Commission on whether Germany received adequate remuneration for the bailout.

Court ruling prompts new probe into bailout terms

The General Court of the EU’s decision in May overturned the Commission’s earlier approval of the state aid, which had been contested by rival airline Ryanair.

The court found that the Commission failed to properly evaluate if Germany had obtained sufficient compensation for its financial support to Condor.

This judgment has now prompted the Commission to reassess the terms of the bailout.

The key focus of the new investigation will be to determine whether Condor’s shareholders and debt holders could have borne a larger portion of the restructuring costs, potentially reducing the financial burden on the German government.

This re-evaluation aims to ensure that state aid is justified and does not distort market competition.

Condor’s response to the investigation

In response to the investigation, a spokesperson for Condor described the Commission’s action as a “logical consequence” of the court’s judgment.

The airline expressed confidence that the probe would reaffirm the initial decision to authorize the restructuring aid.

We are confident that the investigation will soon be completed and that the Commission will confirm the authorisation of the restructuring aid.

The 2021 bailout was crucial for Condor, which faced significant financial difficulties exacerbated by the COVID-19 pandemic.

The restructuring aid was intended to support the airline’s recovery and maintain its operations, safeguarding jobs and connectivity in the German aviation market.

What does it mean for aviation industry?

The outcome of the Commission’s investigation could have significant implications for Condor and the broader aviation industry.

If the investigation concludes that the state aid was not justified, Condor might be required to repay the funds, which could jeopardize its financial stability.

Conversely, a confirmation of the aid’s approval would provide Condor with the necessary support to continue its recovery.

Ryanair, which has been a vocal critic of state aid to airlines, will likely monitor the investigation closely.

The low-cost carrier has consistently argued that such subsidies distort competition and give unfair advantages to certain airlines.

The Commission’s decision will also be closely watched by other EU member states and airlines, as it could set a precedent for future state aid approvals and the level of scrutiny required in assessing such measures.

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