Collapsed Monarch faces £100 mln loss

Airlines boss devastated

LONDON, Oct 3, (Agencies): British shorthaul carrier Monarch Airlines faced an annual loss in excess of £100 million ($133 million, 113 million euros) when it went bust, chief executive Andrew Swaffield said Tuesday.

The airline declared bankruptcy on Monday after failing to secure fresh capital or sell the business, leaving British authorities racing to rescue tens of thousands of customers stranded abroad, while Monarch staff were made redundant.

“Yesterday was a heart-breaking day as 2,000 people lost their jobs and we are all absolutely devastated for the customers and for all of us,” Swaffield told BBC Radio 4.

The Civil Aviation Authority regulator launched an emergency repatriation scheme on Monday to fly back 110,000 Monarch customers to Britain at an estimated cost to taxpayers of £60 million.

Monarch has been badly hit by a legacy of weak demand in previously key markets Turkey, Tunisia and Egypt that have each suffered terrorist attacks in recent years.

Sparked

In turn, the events have sparked fierce competition and oversupply for popular destinations Portugal and Spain.

Consequently, the airline suffered a 25-percent reduction in ticket prices which created a “massive economic challenge” for the group, Swaffield said.

Monarch therefore faced the daunting prospect of a huge loss for the next financial year.

“The figure was well over £100 million” (that the group was projected to lose next year) ... and we could not figure out a way of reducing those losses significantly,” Swaffield said.

“We couldn’t find a way in the end and we reached the end of the road on Saturday night, made the decision and filed on Monday morning.”

He added: “We spoke to a variety of sources, trying to leave no stone unturned, including raising capital to fund trading losses, selling the company and part of the company, and concluded that we had no prospect.”

Meanwhile, the boss of Monarch Airlines said he was “absolutely devastated” by the failure of Britain’s fifth largest carrier which wrecked the holiday plans of hundreds of thousands of tourists and left most of its staff out of work.

The collapse of the airline was a result of higher competition and lower prices in Spain and Portugal due to security concerns in other holiday destinations, Chief Executive Andrew Swaffield told BBC radio in an interview.

“Yesterday was a heartbreaking day. 2,000 people lost their jobs, and we’re all absolutely devastated for the customers and for all of us. It’s been a great family in Monarch,” he said.

In operation since 1968, the airline was owned by investment group Greybull Capital which had kept it going with a 165 million pound ($219 million) injection last October.

Around 90 percent of the staff from Monarch Airlines and Monarch Travel Group were made redundant. Maintenance repair wing Monarch Aircraft Engineering is not in administration and was unaffected.

Decision

The decision to cease trading was taken late on Saturday night, Swaffield said. While rivals such as Air Berlin and Alitalia have continued to operate after going into administration, this was not an option for the British carrier.

“The UK’s insolvency framework doesn’t allow airlines to continue flying, unlike in Germany or Italy,” he said.

He said the decision was taken as the airline was projected to lose “well over 100 million pounds” over the next year.

“We couldn’t figure out a way of reducing those losses significantly, either by selling the short haul airline or by improving it,” Swaffield said, adding that he was working to help staff find jobs elsewhere.

The abrupt failure of the carrier left 110,000 passengers abroad with no Monarch flights to take them home. Britain’s Civil Aviation Authority said that on Monday it operated around 60 flights to bring back nearly 12,000 customers, with a similar number of passengers due to be brought back on Tuesday.

A further 750,000 future bookings with Monarch were cancelled, and now planes that were meant to be used by Monarch will need to find new destinations.

Asia’s second-biggest aircraft lessor, BOC Aviation Ltd , said on Tuesday it was working to find new homes for 13 Boeing Co 737 MAX 8 aircraft it had planned to lease to the collapsed British carrier.