UK’s Monarch Airlines enters administration; cuts 1,858 jobs

UK leisure carrier Monarch Airlines entered administration in the early hours of Oct. 2 and its air operator’s certificate (AOC) has been suspended, marking the UK’s largest ever airline collapse.In addition, later in the day, the joint administrators of Monarch Airlines Ltd. and Monarch Travel Group confirmed that 1,858 employees have been made redundant. “Of these, 1,760 were employees of Monarch Airlines, while 98 were employed by Monarch Travel Group. Between them the companies employed approximately 2,100 people,” UK financial services providers KPMG said in a statement.

Monarch, which has been in business since 1967, ceased operations Oct. 2 after a turbulent two years during which many of its holiday destinations such as Turkey, Egypt and Tunisia were disrupted by terrorism, which caused a downturn in bookings. European airlines and holidaymakers turned instead to more traditional holiday resorts in Spain and Portugal, where there is ferocious LCC competition.

“Mounting cost pressures and increasingly competitive market conditions in the European short-haul market have contributed to the Monarch Group experiencing a sustained period of trading losses. This has resulted in management appointing us as administrators in the early hours of this morning,” KPMG joint administrator Blair Nimmo said.

In recent years, Monarch made a switch from charter to scheduled flights and in 2014 was sold by the founding Swiss Mantegazza family to a UK private equity company, Greybull Capital.

The airline had a fleet of around 35 Airbus A320-family aircraft, most of them A321s. All were leased. Days after it was acquired by Greybull, it placed an order for 30 Boeing 737 MAX 8s, and exercised an option for a further 15 in June this year. The new aircraft were scheduled to start arriving in 2018.

Around a year ago, rumors circulated that the company was in financial problems and Greybull pumped in additional cash.

“The third airline failure this year in Europe, after Alitalia and airberlin, is a symptom of overcapacity and overly aggressive pricing,” ETX Capital market analyst Neil Wilson said, talking to the BBC Oct. 2.

Phone calls to Monarch’s offices went unanswered.

A CAA spokesman told ATW the UK government had asked CAA to organize a rescue operation for passengers stranded overseas after reports began circulating in recent weeks that Monarch was in financial difficulties.

That operation has been launched to bring back some 110,000 passengers, who are stranded overseas on holidays, using around 30 aircraft chartered from a series of European and Middle East carriers. Aircraft—mainly narrowbodies such as A320 and Boeing 737-family types—have been brought in from carriers as far afield as Qatar Airways.

The rescue operation will continue for two weeks, which should cover the vast majority of Monarch passengers currently abroad, the CAA spokesman said. Anyone out of the UK for periods longer than two weeks should contact the CAA, he added. CAA would discuss that with the UK government’s Department for Transport.

“This is the biggest UK airline ever to cease trading, so the government has asked the CAA to support Monarch customers currently abroad to get back to the UK at the end of their holiday at no extra cost to them,” UK CAA CEO Andrew Haines said in a statement.

“Today is a very sad day for the UK airline industry,” said Tim Alderslade, chief executive of Airlines UK, the trade body for the country's airlines. “Today’s news goes to show the ferociously competitive and challenging environment airlines currently operate in. I sincerely hope what has befallen Monarch gives politicians pause for thought about the challenges and costs facing the airline industry, and that at all times they should be champions of a sector that is a massive UK success story and which provides untold advantages to this country in terms of the jobs and connectivity it enables.”
The Luton London-based group’s engineering operation, Monarch Aircraft Engineering Ltd., is not in administration and continues to trade normally.

In the aftermath of the announcement of Monarch’s administration, UK-based LCC easyJet said it had 500 cabin crew positions available, together with positions for some captains and would welcome applications from Monarch staff. The carrier which, like Monarch has its HQ at London Luton, is in the middle of a recruitment drive.

Both easyJet and fellow LCC Norwegian declined to comment on whether they would be interested in acquiring other assets from Monarch, such as airport slots.

Alan Dron alandron@adepteditorial.co.uk

Photos:FPP