Could Condor Be Acquired By A Major Airline, Join An Alliance?

In Europe, you have three major global airline groups — Air France-KLM, International Airlines Group (IAG), and Lufthansa Group — and they’ve been on a bit of an airline shopping spree lately. For example, recently we’ve seen Air France-KLM invest in Scandinavian Airlines, and we’ve seen Lufthansa Group invest in airBaltic and ITA Airways.

Currently, there’s a lot of talk about carriers being interested in investing in Air Europa and TAP Air Portugal, particularly Air France-KLM and Lufthansa Group, in order to build their presence on the Iberian Peninsula. However, it seems to me like there’s another airline that should be ripe for a takeover…

Germany’s Condor needs to find its place in the market

Condor is Germany’s only long haul airline that’s not owned by Lufthansa Group. When Condor was founded back in 1955, Lufthansa was actually a shareholder in the company, as the airlines cooperated closely, with Condor essentially being Lufthansa’s leisure airline.

Over time that changed, and in the early 2000s, Lufthansa sold its Condor shares to Thomas Cook. When Thomas Cook went out of business, Condor ultimately became independent.

It has been an exciting several years for Condor, as the airline has evolved in an incredible way. For example, Condor has replaced its outdated Boeing 767-300ERs with Airbus A330-900neos, offering an impressive passenger experience. Furthermore, the airline has increasingly started competing more directly with Lufthansa in long haul markets, flying between Frankfurt (FRA) and major cities in North America, ranging from Los Angeles (LAX), to Miami (MIA), to New York (JFK).

The issue is, Condor has struggled with how exactly to position itself:

• Condor doesn’t belong to one of the major alliances, but instead has some individual partnerships, like with Alaska, Emirates, etc.
• Condor lacks a huge domestic and regional feeder network, though it’s something the airline has increasingly been working on

Even as Condor has grown in recent years and has increasingly competed directly with Lufthansa, the airline has still been reliant on its biggest rival. Frankfurt isn’t a huge air travel market independently (especially for leisure travelers!), but rather the reason it’s such a big aviation hub is because of the size of Lufthansa’s presence there, plus because of the business demand.

For years, Lufthansa has provided feeder traffic for Condor, at specially negotiated prices. Condor largely fills its planes with passengers connecting to and from Lufthansa flights. This agreement has been mandated by the government, but as you’d expect, Lufthansa has been trying to negotiate its way out of this, as it no longer wants to be affiliated with Condor.

While there has been a lot of litigation, one thing is for sure — Condor needs to figure out a long term, independent plan, where the airline can succeed without relying on its competitor.

Condor seems like a great fit for IAG & oneworld

There have been rumors going around that IAG, the parent company of British Airways, Iberia, Aer Lingus, etc., is considering investing in Condor. Let me emphasize that these are just rumors, and when airliners.de approached Condor about the rumor, the answer was essentially “no comment.”

So I have absolutely no reason to believe that advanced discussions are taking place. However, with all the talk of airline deals in Europe, I’m surprised Condor isn’t brought up more. When you step back and look at the market dynamics, it sure seems like Condor could be a very attractive addition to the oneworld alliance, and to the IAG airline portfolio:

• IAG is strong in the UK, Ireland, and Spain, but weak east of that, so this would fill a major void in the airline group’s network
• The same is true of the oneworld alliance at large; ever since airberlin went out of business, oneworld’s European airlines are limited to British Airways, Finnair, and Iberia
• Joining a major transatlantic joint venture could be a game changer for Condor, in terms of being able to command higher fares

From the perspective of consumers, Condor being acquired by a major airline group would be a mixed bag. On the one hand, it would probably mean that Condor’s fares wouldn’t be as attractive. On the other hand, it would likely mean that more travelers would get more benefits on Condor, and the airline could increase German connectivity for one of the major alliances.

It’s interesting to note that back in 2019, LOT Polish Airlines was going to acquire Condor, but that deal was ultimately called off, at the start of the pandemic. That would’ve been an interesting combination, since I’d argue that LOT is also in the wrong alliance (given its second class status within Star Alliance).

The main challenge with Condor is that even if the airline were to be acquired, it would still need a long term shift in its business plan. Frankfurt just isn’t that huge of a market, without an absolutely massive connecting network. While Condor is trying to build up its regional network, it’s never going to be able to scale to the level of Lufthansa, and that’ll be a challenge.

Could there be merit to Condor moving its hub to another German airport with less competition, near a larger population center, like Berlin, which has for years been sort of neglected by Lufthansa? While there’s a huge population there, it’s not exactly a high yield market.

Germany really is a tricky airline market, when you consider the lack of leisure demand to the country (unlike France, Spain, etc.).

Bottom line

While we have no reason to believe that anything will happen, it sure seems to me like there should be interest in some sort of acquisition of Condor, given the shopping spree the major European airline groups are on. Condor kind of has a confusing spot in the market right now, and I could see merit to an investment from IAG, and the airline joining oneworld.

That’s not to say that anything will happen, but if Condor’s agreement with Lufthansa ends, something will need to be figured out…

What do you make of the concept of Condor being acquired by one of the major European airline groups?