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Competition

LOT has big plans for Condor – how will Lufthansa react?

Polish aviation group PGL will be number two in Germany thanks to the acquisition of Condor. The owner of LOT has big plans for the leisure carrier. Will Lufthansa just let it happen?

Condor

A Condor plane: «I speak Polish now.»

«We’ll get it done.» This was the core message that Ralf Teckentrup has repeated again and again in recent months. And the boss of Condor had every reason to cheer up and reassure the 4900 employees. After the bankruptcy of his mother, Thomas Cook, the holiday airline only continued to fly thanks to a state-guaranteed loan and had to find a new owner by spring.

The management of Condor has now succeeded. If the competition authorities approve and the creditors agree, the German airline will definitely be owned by the Polish PGL in April. In the night before Friday (24 January), the holding company of the national airline Lot signed the respective purchase agreement.

Competence center for leisure flights

The price PGL pays for the new subsidiary remains a secret. But with the money, Condor can pay back the 380 million euros loan. In addition to PGL, two other interested parties – both Anglo-Saxon financial investors – had submitted bids, but their offers were lower.

Condor will be the sixth subsidiary of the PGL Group, alongside Lot Polish Airlines, the ground handling companies LS Airport Services and LS Technics, the maintenance company Lot Aircraft Maintenance Services and PGL Leasing, which was newly founded in 2019. It is supposed to become the new competence center for lesiure flights. PGL CEO Rafal Milczarski explained at a press conference in Frankfurt that this area had been abandoned several years ago and is now being rebuilt.

New Aircraft

The head of the Polish state-owned company made one thing clear: he is not going to leave things as they are. Milczarski wants to expand with the help of Condor – and not only in Germany. In addition to Poland, he also named Hungary as a country in which he intends to grow. In Budapest, Lot is already offering long haul flights. He sees no reason for job cuts at Condor. «In fact, there could be more jobs,» said Milczarski. The German unions welcomed the deal accordingly.

Condor is also to recieve new planes for growth. At the press conference, PGL head Milczarski spoke of 20 jets that are to be ordered for the new subsidiary as replacements for the previous long-haul planes. At present, on long haul destinations, Condor operates 16 Boeing 767s with an average age of 24 years.

Boeing 787 for Condor?

The PGL boss left it open on which model will be chosen for Condor. He emphasized, however, the synergies from which the companies can now benefit. So that could be a hint that Condor might be getting Dreamliners. Lot operates both Boeing 787-8 and 787-9, which are similar in size to the 767 of the German airline.

On short and medium-haul routes, however, Condor will probably stay with Airbus. Lot owns Boeing 737 and 737 Max, Bombardier Dash 8 and Embraer E-Jets. But Milczarski stated that he is pleased that PGL is now also an Airbus operator. The Condor brand will continue to be on the planes in the future, said the PGL boss. Because it is «very strong».

Lufthansa often reacts harshly

One major unknown, however, remains: How does Lufthansa react to the entry of a competitor into its home market? Milczarski played down the danger of a counter-reaction at the press conference. Relations with Lufthansa are good, said the PGL boss. He emphazized that the company cooperates well with Lufthansa, including within the framework of the Star Alliance. The cooperation with Condor, in which Lufthansa acts as a feeder, also benefits both, added Condor boss Teckentrup.

But the whole thing might not be quite so simple. When Ryanair announced that it wanted to achieve a 20 percent market share in Germany, Lufthansa reacted by expanding Eurowings. When Etihad acquired a stake in a regional airline in Switzerland and wanted to develop it into a feeder airline, Lufthansa reacted by massively expanding its subsidiary Swiss.

State-financed competitor

This is all the more true as Lufthansa is itself developing long-haul tourism as a new business segment. And its destinations already resemble those of Condor to a large extent, even if the offering is still small. Whether the market leader will really still act as a feeder for Condor in the long term remains to be seen.

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