Expect ruffled feathers in Frankfurt as the Polish Aviation Group (PGL), which owns LOT Polish Airlines (LOT), swoops in to rescue the former Thomas Cook-owned German leisure carrier Condor, clipping Lufthansa right in the wings.
Besides the competitive implications to Lufthansa of this purchase, there is a little matter of two cranes in a circle—tail logos—still to resolve between them.
The transaction is expected to close by April 2020, pending antitrust approvals. On the whole, PGL’s acquisition is good news for Condor, and for the 22% share of German holidaymakers who are loyal to the leisure carrier.
It’s also good news for Germany. PGL has committed to fully repay the bridge financing provided by KfW which was guaranteed by the German Federal Government and the State of Hessen, and is reported to be around $422 million (€380 million).
There was more good news in the announcement as PGL committed to keeping the leisure carrier in-tact, embracing it as part of a strategy for growth.
“The acquisition of Condor fits perfectly into PGL’s strategy,” said Rafał Milczarski, President of the Management Board of PGL. “It also secures the future of Condor and offers stability and great opportunities to its employees, customers and business partners.”
Ralf Teckentrup, Chief Executive Officer Condor was happy. He gets to keep his job, and so do the airline’s nearly 5,000 employees.
“We are pleased that Condor, Germany’s most popular leisure airline, has gained in PGL and LOT stable, experienced and dynamically developing partners who secure the future of our business. Together we will serve twice as many passengers, thus forming one of the largest aviation groups and the leading leisure airline group in Europe. Our partners and customers can safely plan their holiday flights with Condor,” he said.
Poland’s Prime Minister Mateusz Morawiecki was positively over the moon, proudly declaring at a press briefing, “We’ve got Condor!” Morawiecki sees this acquisition as symbolic of the strength of Poland’s economy and its “accession to the advanced countries, to the developed markets.”
“Until now foreign companies have taken over valuable Polish assets – we’re reversing this trend…We’re reaching for foreign assets,” he said. “We’re in a position to pay as much for them as necessary.”
Lufthansa loses the leisure brand it helped build
Condor was Lufthansa’s leisure brand from 1959 to 2009 when Lufthansa sold Condor to Thomas Cook. Lufthansa had also put in a bid to buy the airline back in May of 2019, as Flight Global reported.
“We believe that we can offer Condor good prospects and maintain the business as a whole, both long- and short-haul operations,” Carsten Spohr said at the time.
But there were concerns that the Lufthansa bid for Condor would find antitrust resistance. And the Lufthansa Group has enough going on to keep it busy. The prospect of another acquisition became less appealing with time, and they might have capitalized on the unserved leisure market if Condor had folded.
That opened up the market for a rival and it was an opportunity PGL was glad to take-up. Combined, LOT and Condor are expected to serve about 20 million passengers per year. For comparison, Lufthansa served over 145 million passengers last year. But PGL has bigger plans for LOT, with greater expansion in Europe and internationally.
“We want to develop Condor’s iconic brand in Germany and also introduce it to other markets in Europe. We wholeheartedly welcome all Condor employees to the PGL family and invite them to build together one of the greatest aviation groups in Europe,” Milczarski said.
The tail-end of the tale
As AeroTelegraph first reported in December of last year, LOT challenged Lufthansa’s European registration of its new brand logo, specifically the crane design on the aircraft tail. The polish carrier claimed Lufthansa’s new look is too close to its own white on blue crane design, created by Tadeusz Lucjan Gronowski in 1931.
Lufthansa’s aircraft tails were graced by a blue crane in a yellow circle background for decades. In 2018, Lufthansa airline caused quite a stir among some in the aviation community by deciding to cut out the sunny side and introduce a crisp blue and white on blue new look.
The Lufthansa crane itself predates the LOT crane and the yellow background. It was designed by Otto Firle in 1918. But the issue, LOT claims, is that the combination of similar colors and circles might confuse consumers.
Lufthansa and LOT were said to be in talks to resolve the matter, but those talks may now come to a screeching halt, leaving the issue of cranes circling around them.
Speaking of brands, Condor customers should expect nothing to change immediately. LOT’s announcement recognizes the value of the Condor brand and the airline’s product offering. It seems the PGL strategy is not to break what is working.
The question is: with the Thomas Cook heart broken, will we soon see a yellow on blue version of the iconic Condor flying? Or will LOT keep the grey?
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