British carrier Monarch goes into administration

British airline and travel firm Monarch was placed into administration yesterday, with terror attacks in Tunisia and Egypt, coupled with the weak pound being blamed for the collapse of the low-cost carrier.

The UK’s fifth largest airline announced it was to cease trading at 4am, (7am GST) when all its planes had been grounded.

The announcement has left 110,000 passengers stranded overseas, who will be picked up by government body the Civil Aviation Authority.

About 860,000 passengers were told yesterday morning that they had lost their bookings with the airline.

Because of the last-minute announcement, many had already arrived at airports across the UK before they discovered that they would not be able to fly.

Blair Nimmo from KPMG, the company appointed as administrators, said that falling revenues in an increasingly competitive market, combined with increased costs as a result of currency fluctuations, had created losses which made Monarch’s future “unsustainable”.

Mr Nimmo said the reason for the collapse was created “partly by a depressed revenue stream because of overcapacity in the short haul market, brought about by the terrorism activities in Tunisia and Turkey [and] Sharm El Sheikh.”

“The cost space has [also] increased through the devaluation of the pound against the dollar,” he added.

Monarch employs 2,100 people split between the tour group and the airline.

It also employs a further 600 to 700 people as part of its engineering body, although this arm of the company is outside the insolvency, Mr Nimmo said.

Britain’s transport secretary Chris Grayling said that the airline had been a victim of a “price war” in the Mediterranean in an interview with the BBC. Mr Grayling, who had campaigned for Britain to leave the European Union before the 2016 referendum vote, denied that Brexit’s impact on the weakening of the pound had been a factor in the collapse.

He asked holidaymakers abroad to be patient while the CAA carries out its “biggest peacetime repatriation” effort using 30 aircraft.

John Strickland, director at JLS consulting, said Monarch had “lost its way” trying to compete with dominant low cost European airlines such as Ryanair and easyJet.

He said: “The market is very competitive especially as most airlines have shifted capacity out of the eastern Mediterranean to markets such as Spain following terror attacks. This has led to overcapacity and price pressure.”

Monarch was bought in 2014 by London-based investors Greybull Capital, having previously been owned by the Swiss-Italian Mantegazza family since its launch in 1968.

Greybull put £165 million (Dh811m) into the company last year when the airline was on the edge of collapse, but this was not enough to save it.