UK’s Monarch Airlines goes bust

Flights cancelled as British airline goes bust due to strong competition from rivals for flights to destinations in Spain and Portugal

Britain’s Monarch Airlines collapsed on Monday, stranding more than 100,000 travellers abroad after it fell victim to intense competition for flights to Spain and Portugal.

Britain’s Monarch Airlines collapsed on Monday, stranding more than 100,000 travellers abroad after it fell victim to intense competition for flights to holiday destinations in Spain and Portugal.

The failure of Monarch, the largest British airline to go bust, will affect nearly 900,000 passengers in total and prompted the country’s biggest peacetime repatriation effort.

Its demise added to turbulence in the European airline industry after Air Berlin and Alitalia filed for insolvency in 2017.

Ryanair has also been forced to cancel thousands of flights because of problems finding enough pilots to fly them.

Shares of Monarch’s rivals, easyJet, Ryanair and Wizz Air rose on the prospect of reduced competition and the chance to acquire some of its assets.

Monarch, based at Luton Airport north of London and in business since 1968, cancelled about 750,000 future bookings and apologised to customers and staff.

“I am so sorry that thousands now face a cancelled holiday or trip, possible delays getting home and huge inconvenience as a result of our failure,” Monarch CE Andrew Swaffield told employees. “I am truly sorry that it has ended like this.”

Monarch’s finances deteriorated in 2016, after security concerns deterred travel to Tunisia, Turkey and Egypt and brought increased capacity for routes to Iberia. The decline in the value of the pound has also compounded its problems. The airline was bailed out by its owner Greybull Capital a year ago.

“Monarch has really been a victim of a price war in the Mediterranean,” Transport Secretary Chris Grayling told Sky News. He expected many of the more than 2,000 staff to get jobs elsewhere, he said. “Monarch’s problem was it was neither one thing nor the other. It was not really... a package holiday airline, nor was it really a low-cost airline. I think it got rather squeezed in the middle.”

The British government has asked the Civil Aviation Authority to charter more than 30 aircraft to bring home about 110,000 Monarch customers overseas, the authority said.

Monarch has seen market share slip in recent years with the rise of budget carriers. It was Britain’s fifth-largest airline, and according to Euromonitor International, held 1.7% of the UK airlines market in 2017, down from 2.6% in 2012.

The collapse of Monarch could benefit its rivals.

“While we wait to see what comes out of the administration process, there is no doubt that the pace of restructuring across Europe will be beneficial to yields as surplus capacity is reduced,” analysts at Goodbody said in a note to clients.

Analysts at broker Cantor Fitzgerald said it was likely that easyJet would bid for Monarch’s assets. “Monarch appears to be a good potential fit and we think that easyJet needs a new source of growth.”