Monarch Files for Insolvency in UK’s Biggest Airline Collapse
At the start of this month, many UK holidaymakers were greeted with the shock news that the UK leisure carrier Monarch Travel Group had suspended flights and holidays, leaving many tourists stranded overseas. To get travellers back to the UK, the Civil Aviation Authority (CAA) had to launch the biggest ever peacetime repatriation exercise, with an estimated 110,000 passengers now safely back in the UK.
The insolvency of Monarch is the third failure of a major European airline operator in five months and led to the cancellation of all future flights and holidays and has affected a further 300,000 people.
An Autumn to Forget for the Airlines
The collapse of Monarch, which employed around 2,000 people and was the UK’s fifth biggest airline, follows the failure of airlines like Alitalia and Air Berlin as well as the mass cancellation of flights by Ryanair, which has disrupted the travel plans of around 700,000 customers.
The spate of insolvencies is said to be the result of a glut in capacity prompted by the low oil price which saw low-cost rivals slash ticket prices to compete for market share. However, the weak pound in a dollar-denominated fuel market has squeezed margins further. Monarch tried to sell its ailing short-haul business prior to filing or insolvency but its attempts failed.
One Airline’s Loss is Another’s Gain
The airline has now been placed in administration, leading to the suspension of the Luton-based company’s operating license. This opens up new opportunities for its rivals, with the share price of EasyJet, Flybe and Ryanair rising by 5.3 percent, 4.1 percent and 3.6 percent respectively, as they consider snapping up the stricken carrier’s assets and expanding into its old routes.
This is good news for Monarch employees, many of whom should be able to secure jobs with the airline’s rivals. EasyJet has already said it has encouraged Monarch employees to apply for jobs, while Virgin Atlantic has launched a program to recruit the airline’s pilots. British Airways has also expressed an interest in Monarch’s takeoff and landing slots as well as its fleet and crew.
Not the First Time Monarch has Struggled
Monarch, which was founded in 1968, has come close to collapse before. In fact, just last December, the airline was saved with a £165 million capital injection by Greybull Capital LLP. just hours before it was due to be grounded by the CAA for a lack of funds.
After a study by a team of consultants showed there was little hope for Monarch in the short-haul European market, the airline had planned to ‘pivot’ into the long-haul sector in spring next year. However, that plan failed when buyers for the existing operation were not found.
The result is that 1,858 staff have already having been made redundant according to the administrator KPMG. That leaves around 250 staff to assist with the repatriation efforts, now all but complete, and the winding up of the company.