Restructuring aid to Condor: Commission opens formal investigation
The European Commission has opened an in-depth investigation to assess whether a German €321.2 million restructuring measure in favour of Condor is in line with EU State aid rules.
In 2021, the German authorities notified a €321.2 million restructuring measure to enable Condor’s return to viability. The restructuring measure consisted of: (i) €90 million debt write-off on a state-guaranteed €550 million public loan extended by the German development bank KfW, (ii) a restructuring of the repayment conditions of the remainder of that loan, to the extent it was used for financing restructuring costs, and (iii) a €20.2 million debt write-off on interest due by Condor in the context of coronavirus compensation it had received. The Commission approved this measure in a Decision adopted in July 2021.
In a judgment rendered on 8 May 2024, the General Court annulled the Commission’s decision finding that the Commission had not assessed whether Germany received sufficient remuneration for the debt write-offs granted to Condor. In particular, the Court held that the Commission should have assessed whether Germany received sufficient up-sides, which would ensure that former shareholders and subordinated debt holders sufficiently shared the burden of restructuring, in order to reduce the aid amount.
With this decision, the Commission is following up on the guidance from the General Court and will further investigate the restructuring measure and assess whether, and if so, to what extent, further burden sharing, and reduction of moral hazard was possible and required and whether this would have had an influence on the nature and size of the compensatory measures put in place.
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