Monarch: a crash-landing for the troubled airline

The abrupt collapse of Monarch Airlines – leaving 110,000 travellers stranded abroad and another 715,000 future bookings cancelled – was “a very British failure”, said Liam Proud on Reuters Breakingviews. That was apparent in the Dunkirk spirit shown by the Civil Aviation Authority, which swiftly chartered an ad hoc fleet to bring home holidaymakers. But it was also evident in the Government’s decision “not to step in and help save” some 2,100 jobs at the Luton-based group. Monarch is the third airline failure in Europe this year after Alitalia and Air Berlin. The other two are still flying.

The demise of an airline is “always shocking for customers and staff”, but few industry-watchers will be surprised by the failure of Monarch, said Nils Pratley in The Guardian. The airline has been in constant crisis since it was bought (as an already troubled concern) by the private equity firm Greybull Capital in 2014 – and was only saved from bankruptcy last year when Greybull ploughed in another £165m. Currency movements, terrorism in Egypt and Turkey, fuel prices and air traffic control strikes all caused turbulence. But “the underlying cause” was that rivals easyjet and Ryanair are simply “bigger, better-capitalised, more efficient and more able to ride the upsets”. They’re now the main beneficiaries of Monarch’s demise.

“How do you become a millionaire? Start with a billion, then buy an airline.” It’s the “oldest joke in the investment book”, said Jim Armitage in the London Evening Standard. But it’s amazing how often “otherwise entirely sane” investors lose their heads “as soon as an aeroplane twitches its tail fin”. By my reckoning, Greybull is down about £200m on its Monarch deal. Will that deter others from being “hypnotised by a doomed airline’s wing-and-a-prayer business case”? I doubt it.