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German airline Condor eyes return to profitability next year

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Condor airliner lands at Son Sant Joan airport in Palma de Mallorca
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By Zuzanna Szymanska and Ilona Wissenbach

FRANKFURT (Reuters) - German leisure airline Condor may return to profitability from next year and aims to boost its fleet capacity as people rush to book long-awaited holidays after the lifting of COVID-19 restrictions.

The carrier's announcement adds to the positive news coming from the travel sector, including strong sales at holiday Group TUI, Germany's flag carrier Lufthansa and airport operator Fraport.

"I expect Condor to grow - if I have my way, quite significantly," Chief Executive Ralf Teckentrup, who plans to retire at the end of 2023, told Reuters in an interview.

Condor's fleet shrank to 53 aircraft from 61 in 2019 amid restructuring following the bankruptcy of its former parent company Thomas Cook, but Teckentrup is aiming to return to 60 planes in the medium term, which he said would be "a fine number".

"At the moment, financial stability is our top priority. Once that is done, we can also grow," he said.

While the company will not reach profitability in the current fiscal year ending Sept. 30 due to difficulties last winter, it may stop making losses in 2022-2023, Teckentrup added.

"I'm firmly convinced we can be very profitable there - assuming there will be a decent winter like before corona followed by a decent summer like before corona," he said.

Competition from Lufthansa's new budget long-haul flight subsidiary Eurowings Discover and the resulting price war will cost the smaller rival 30-40 million euros ($31.5-$42 million) in operating profit each year, Teckentrup said.

He added that Condor plans to look for new long-haul destinations and pay more attention to mass markets such as New York or San Francisco, where Lufthansa has higher costs.

"Demand for flying is unbroken and people are willing to pay more money for it. Because it has not become cheaper," he said, adding that fuel makes up 30% of an airline's costs and the Ukraine war doubled the price of jet fuel.

($1 = 0.9528 euros)

(Reporting by Zuzanna Szymanska and Ilona Wissenbach, Editing by Rachel More and Emelia Sithole-Mtarise)

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