Zenith CC&P Current Awareness

European Commission probes Thomas Cook’s subsidiary rescue under State aid rules

1 October 2019

Prof. Suzanne Rab

Zenith's Suzanne Rab writes:

Germany has announced that it is in “constructive talks” with the European Commission over whether an anticipated loan of EUR380 million to Condor Airlines amounts to State aid.

Condor’s parent company Thomas Cook went under compulsory liquidation last week after lenders refused to fund a rescue by its largest shareholder, Fosun.

The German federal and state governments agreed to grant a temporary loan to support the German subsidiary subject to advance State aid clearance.

Germany reports that it expects the loan to be approved under the State aid rules citing an earlier rescue package of EUR170 million granted to Air Berlin in 2017. 

It has been asked why a similar option was not open to the UK to bailout the parent company.  In short, the scale of the parent company’s financial difficulties meant that the prospects of returning it to long-term financial health were remote.  State aid of this nature can only usually be granted as a rescue measure once all market options have been exhausted, on a temporary basis and in combination with a repayment schedule.

Current Awareness

By the CC&P team