Major revivals are taking place in the European aviation industry. Polish carrier LOT is acquiring Thomas Cook’s German airline Condor. The deal to create a leading aviation group in Europe carrying more than 20 million passengers a year.

Condor operates a fleet of more than 50 aircraft while LOT has a fleet of 80 aircraft. LOT chief executive Rafal Milczarski said he sees a possible order of around 30 planes from Boeing and Airbus.

Unlike Thomas Cook, the holiday company that collapsed in September, Condor received a lifeline from Germany in the form of a 380 million euro ($422 million) bridging loan, allowing it to be rescued.

Flight attendants of  Condor and  LOT posed with model airplanes of their respective companies during a press conference on Friday in Frankfurt,  Germany.  LOT said it would take over  Condor, a former subsidiary of bankrupt travel operator Thomas Cook that has been kept aloft with government loans. Earlier, Reuters had cited three sources saying LOT was buying Condor.

In a statement Condor and LOT, which is owned by PGL, said they would pay back the loan from Germany in its entirety. They expect the takeover to be completed by April 2020 once antitrust approvals have been secured.

“The purchase secures the future of Condor and thus offers its employees, customers and partners stability and a great perspective,” said Rafal Milczarski, Chairman of the PGL Management Board.

The companies said Condor, which competes with Lufthansa and TUI fly, would continue to operate under its current management.

As it seeks to cut costs, Condor last week struck a deal with its flight attendants on plans to cut 150 of its 2,400 cabin jobs. That followed an earlier deal to cut 170 jobs in overhead operations.

Lazard and Pekao were the investment banks working for PGL while Rothschild & Co acted for Condor.

Polish Prime Minister Mateusz Morawiecki, whose cabinet is nationalist, told a news conference on Friday: “Up until now foreign companies have been taking over Polish precious assets, now it is the other way round!”

Meanwhile, aircraft investors are struggling to value the grounded Boeing MAX. To restore faith in the 737 MAX, Boeing needs to prove its flagship jet is not just airworthy but also a safe investment.

At a gathering in Dublin this week of the titans of the multibillion-dollar aircraft leasing industry, which finances half the world’s fleet, cracks were appearing in that effort.

Boeing said on Tuesday its troubled workhorse - grounded last March after two crashes in which 346 people died - should receive approval by mid-year from US regulators, paving the way for hundreds of jets to resume service later this year.

But in scores of high-stakes negotiations in the background, it is trying to convince banks, leasing firms and airlines that the investment case for thousands more of the jets - worth hundreds of billions of dollars - remains intact.

Airplane owners and investors said some lenders were already demanding higher collateral in deals on the MAX. One airline said financing for pre-delivery payments had dried up amid the uncertainty - though the market won’t be fully tested until closer to renewed deliveries.

“Even people who have committed to financing previously are wondering should I extend or should I just pull back to wait to see because they don’t know the real value of their collateral going forward,” said the head of an asset-management firm active in the sector, declining to be named to preserve relations with Boeing.

“Banks I think are getting a bit nervous,” he said.

Boeing already risks losing some smaller customers who are pondering whether to revoke deals with lessors once delays of 12 months provide them with get-out clauses, according to consultant IBA, whose valuations underpin some financing deals.

That in turn could push down lease rates - and the underlying value of the plane they imply.

“Even when we’re back under starter’s orders and we’ve got certification, I still think there will be downward pressure” on MAX lease rates, IBA Chief Executive Phil Seymour said.

A deeper battle for Boeing is to convince its leasing mega-clients, who have orders worth tens of billions of dollars, that the MAX remains a long-term investment.

In that battle, Boeing is fighting on two main fronts, executives said: compensation talks and efforts to convince purchasers that the MAX production cycle will not be cut short, a step that would undermine the value of the plane.

Reuters