Monarch grounded, enters administration

The CAA confirmed overnight that Monarch Airlines, the UK’s 5th largest airline has ceased trading, and will enter administration – effectively bankruptcy – and that a fleet of 30 Qatari and other airlines aircraft will be used to return 110,000 passengers from overseas to the U.K.

The administrators KPMG, will be appointed Monday, and in U.K. law they are required to secure the company’s future first as a going concern, if that proves impossible, they must sell the assets to recover debts. In effect all 2,750 employees have instantly lost their jobs. 

It’s unclear what happens to Monarch engineering, a subsidiary and separate business.

In some circumstances businesses do continue trading while in administration, but rarely does that happen with an airline.

Monarch leases all of its aircraft so administration will trigger an automatic seizure clause by the lessor, who will want to claim back their aircraft as quickly as they can, unless they agree otherwise with the administration team.

Monarch has had a rough time, it tried to survive in an era where competition is cut throat  but could never achieve the physical size needed to push past a critical mass. It’s recent descision to review and possibly refocus, on long haul after just two years of flying short haul scheduled, having moved from charter and holiday flights, proved inadequate.

Greybull, the airlines owner, claimed that the collapse in the pound caused by Brexit, the uncertainty around airlines futures because of Brexit negotiations appearing to get nowhere, seriously affected Monarch because it’s size made it more susceptible to such variations.

Part of the problem was leasing costs that were signed years ago were unsustainable, many of the aircraft – especially the A321’s were not operating at full capacity and fares were too low to remain competitive in the face of Norwegian, RyanAir, Jet2, Flybe, easyJet and Vueling, a  combination of which operates everywhere Monarch did and often on the same routes.

Greybull clearly decided its patience and pockets  were no longer deep enough to suport the airline. Boeing will loose a 45 aircraft Max-8 order.

It’s a very sad day to loose a fifty year old airline that for many, was their first flight to what must have seemed relatively exotic overseas destinations in Southern Europe back in the 1960’s and 1970’s.  Our thoughts are with 300,000 people who will eventually get their fares refunded but have lost their flights, the 110,000 who will need repatriation, but not least to the employees who have lost their jobs this morning. 

A sad day.