U.K. leisure carrier Monarch Airlines filed for insolvency on Monday, the biggest ever failure of a British airline, stranding tens of thousands of travellers overseas and prompting the country’s biggest-ever peacetime repatriation effort, as the government has to find a way to to arrange the return of 110,000 tourists, and marking the third failure of a major European operator in five months. Monarch cancelled about 300,000 future bookings and apologized to customers and staff as it became the UK’s largest carrier to go into administration, according to Reuters.
Monarch CEO Andrew Swaffield said the carrier had fallen victim to “outside influences,” especially a flood of seating into its core Mediterranean markets after a spate of terrorist attacks prompted holiday companies to reduce their exposure to Egypt, Tunisia and Turkey. Attempts to sell the short-haul business prior to the insolvency filing failed, he added.
“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,” Swaffield told employees in a message. “I am truly sorry that it has ended like this.”
According to a statement, the airline and Monarch Travel Group were placed under administration, leading to the suspension of the Luton, England-based company’s operating license. Future flights and holidays have been canceled and won’t be rescheduled, affecting a further 300,000 people. Monarch said its companies that entered into administration include Monarch Airlines, Monarch Holidays Ltd, First Aviation Ltd, Avro Ltd and Somewhere2stay Ltd.
A notice for Monarch staff is seen stuck to a door after the airline ceased trading,
at Luton airport in Britain, October 2, 2017
UK transport secretary Chris Grayling said the company fell victim to a price war over flights to the Mediterranean and told customers not to come to airports. “We are doing our best to make sure that those people who are stranded and can’t get back otherwise will be able to do so,” he told BBC television, adding that he expected many of Monarch’s more than 2,000 staff to get jobs elsewhere. The British government has asked the Civil Aviation Authority (CAA) to charter more than 30 aircraft to bring back to the UK about 110,000 Monarch customers currently overseas, the CAA said.
As Bloomberg notes, the collapse of Monarch, which served more than 40 destinations from five U.K. bases, follows insolvency filings at Alitalia and Air Berlin as a glut in capacity prompted by the low oil price compels carriers to slash fares in a battle for market share. At the same time, the low-cost operator has seen margins squeezed by higher fuel costs, which are priced in dollars, following the pound’s decline in the wake of last year’s Brexit vote. Tough competition has been pressuring European airlines while driving consolidation and, well, bankruptcies.
Furthermore, the developments at Monarch, which employs 2,100 people, follow on the heels of 20,000 flight cancellations at low-cost rival Ryanair Holdings Plc due to pilot scheduling issues, which have disrupted travel for around 700,000 customers.
The airlines' collapse will be a headache for some of the world’s largest leasing companies, which financed its current fleet of 36 mainly Airbus jets, and for Boeing, which has sold the airline 32 of its 737 MAX aircraft. None of the planes has yet been delivered. Although relatively small compared to Europe’s leading scheduled carriers, Monarch had been a regular hotspot in the global battle for market share between planemakers as it shifted its loyalties between Airbus and Boeing.
As Reuters adds, Boeing secured Monarch’s agreement to revert back to its jets in 2014 following a fierce contest against Airbus and Bombardier.
“We are working with the joint administrators and the CAA to do everything we possibly can to help minimise disruption where we can, but are under no illusion as to the problems this will cause,” Monarch’s Swaffield said. “And many suppliers will suffer hugely as a result of our insolvency – for which I am equally sorry.”
Flight tracking service Flightradar24 reported that at least 25 aircraft had been lined up to start repatriating passengers by 0600 GMT on Monday, including 10 from Qatar Airways already based in Europe on behalf of British Airways. An easyJet airplane and several charter aircraft were also part of the operation. Hungarian low-cost carrier Wizz Air meanwhile said it was offering to fly stranded Monarch passengers home from Tel Aviv for 119 pounds ($159) each.
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Monarch, which was founded in 1968, has come close to collapse before, with the airline rescued by a 165 million-pound ($220 million) capital injection from Greybull Capital LLP last December, just hours before it faced grounding by the U.K. Civil Aviation Authority due to a lack of funds. Greybull had bought 90% of Monarch in 2014 via a 125 million-pound recapitalization that funded the final elements of a transformation from charter specialist to discount carrier. The private-equity firm said in a statement Monday it was “very sorry” that the three-year turnaround bid failed.
The latest airline banktupcy opens up opportunities for rival operators to expand into former Monarch routes or snap up the carrier’s assets. Cantor Research analyst Rob Byde said in a note that the failure is “another step in the consolidation of the European short-haul market” and that it views EasyJet Plc, Britain’s biggest discount carrier and also based at Luton, as a likely bidder, though a wholesale takeover is unlikely. According to Bloomberg, British Airways owner International Consolidated Airlines Group SA has expressed interest in Monarch’s takeoff and landing slots, fleet and crew, Sky News reported over the weekend, without saying how it got the information. IAG has a growing discount arm of its own in Barcelona-based Vueling.