Thomas Cook may have collapsed in the UK but, thanks to a bridging loan from the German Government, the German operation of the company has been handed a lifeline.
The business, which is the German Thomas Cook Group, airline Condor, has been given a bridging loan of 380 million euros from the German government after the collapse of the company in Britain.
Thomas Cook ceased operating after being unable to raise emergency funds and as a result the firm, which is 178 years old, were forced to shed 9,000 UK staff. The devastating fall-out from the collapse saw 600,000 holidaymakers, including tens of thousands from Germany, stuck overseas.
The 150,000 or so British tourists stranded faced the prospect of being repatriated by the government in a huge project, named Operation Matterhorn, which was described as the biggest peacetime repatriation in British history.
Condor is said to be in a "stable" financial position but needs the bridging loan to get through the low winter season because its financial reserves were tethered to the bankrupt parent company.
Condor CEO Ralf Teckentrup declared in an article published in the Financial Times that the airline is currently profitable and will show further profit this financial year before reiterating that the additional capital it would usually reserve for the winter period, with less travel demand, has been used up by its now-insolvent parent Thomas Cook Group.
“Condor is an operationally healthy and profitable company that will make a profit also in the current year. We need this bridging finance for the winter. The agreement is an important step towards securing our future.”
The loan is for a period of six months to ensure the airline can operate through the quieter northern winter period. And because the bridging loan is in place various arms of the business's overseas operations (Thomas Cook Airlines Balearics out of Palma de Mallorca and Thomas Cook Aviation using Frankfurt International) have a chance of successfully navigating the troubling period.
Condor is able to stay afloat in this way thanks to filing what is known as a "protective screen" which in German insolvency law protects German set-ups from the liquidation of foreign companies related to German operations.
The bridging loan was easily delivered because ordinarily Condor is profitable enterprise. And the fact that the loan will save around 4,600 jobs in Germany has met with the approval of labour union Verdi with a spokesman saying it supported the application. Director Christine Behle mentioned in Reuteurs that it was encouraging that the company was profitable and enjoyed brand trust, adding: “Everything that is possible needs to be done in order to save Condor and its jobs.”