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€380 Million Bridging Loan for Condor Proposal

The German Government and the German state of Hesse, where Condor is based, are willing to invest €190 million each, making a total of € 380 million investment in the airline Condor.  This will allow the German airline, owned by the now insolvent Thomas Cook, to continue operating, ensuring that the eight weekly flights to Madeira, totalling some 80,000 seats a year remain available.

On Tuesday evening of the 24th of September the German Minister of Economics, Peter Altmaier, claimed that “Condor is a profitable company” and that the decision of the Government and that of the German state to ‘save’ the Condor with a  bridging loan of € 380 million was a sensible one, and that the loan is based ‘on economic factors, not political criteria.’  The loan will also allow, according to the German minister, 240,000 stranded German travellers to return home.

In a statement by Jorge Veiga França, President of the Funchal Commercial and Industrial Association (ACIF) and the Madeira Chamber of Commerce and Industry (CCIM). ‘If the proposal goes ahead, it will automatically remove a catastrophic scenario for Madeira, and for Portugal’s tourism, which relies heavily on companies like Condor.  He went on to say that if Condor cannot survive the collapse of Thomas Cook, the situation for Madeira will be so much worse.’

Condor currently operates eight weekly flights to the island, totalling 1,500 airline seats per week and around 80,000 annually.  This accounts for 25% of the German market in the region. Fortunately, only a third of Condor flights to Madeira are filled by Thomas Cook passengers, the remaining 70% of customers have booked their flights with other operators such as TUI.

Although the European Commission does not allow businesses to be aided by the state, the ACIF president stresses that “in this case, they are justified, and that not everything can be assessed under one criterion.’ He went on to say that he hopes that Brussels will give the green light to the German plan to save Condor.  If this does not happen, then it will be a catastrophe for Madeira.

Jorge Veiga França also points out that the €380 million bridging loan for Condor is valid for six months, a period in which the company will have to be financially restructured.  However, Condor  should bring in €43 million in profits before of taxes by the end of this fiscal year, which ends on the 30th of this month.  It may be a short term solution, but the ACIF president hopes that it will work, especially as there are several other companies interested in the airline including Lufthansa and TUI.

The expected endorsement by the Competition Directorate-General in Brussels to rescue Condor requires a further step from the tourism sector in Madeira, according to the president of ACIF.  He said ‘We will have to fight and replace the places left open by Thomas Cook.  This will then have to go though a budget review by the Madeira Promotion Association (APM).  Of course, this couldn’t have happened at a worse time; at the end of the peak tourist season.’ However, Increasing promotion funds by private individuals, ANA and Turismo de Portugal would support ‘the effort to go after various markets to fill the void.

In Madeira, the bankruptcy of Thomas Cook’s English Operation has directly affected British tourists, accounting for 4,000 annual airline seats. However, the president of ACIF is quick to argue that Thomas Cook did not operate its own planes here and that through additional effort on their part it is possible to recover the shortfall.’

Apart from the German market, one of the main concerns was the Nordic tourism sector, and what would happen to Thomas Cook – Scandinavia.  Luckily the Scandanavian branch of Thomas Cook has assured ACIF in writing that the Madeira route is profitable and will continue.

The president of ACIF has no doubt that the bankruptcy of the 170-year-old tour operator who had been undergoing financial difficulties in recent years, was negatively impacted by Brexit and that the UK’s decision to leave the EU was the coup de grace to an already sick company.’

Samantha Gannon

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Photo: Simon Maage – Upsplash

Madeira Weekly