Monarch's administrators explain 'unusual' early morning failure announcement

Blair Nimmo, Jim Tucker and Mike Pink from KPMG have been appointed joint administrators to Monarch Airlines Limited and Monarch Travel Group Limited, which ceased trading just after 4am today (October 2).

Monarch, which was founded in 1968, secured a 24-hour extension to its tour operator’s licence on Saturday night, but it proved to be a temporary stay of execution amid uncertainty over the airline’s finances.

All flights operated by Monarch – which is based at Luton Airport and employs around 2,100 people between the airline and tour operation – from the UK and all future holidays booked with the group are cancelled with immediate effect.

The CAA, with assistance from the administrators and employees of the company, and at the request of the government, will be coordinating the repatriation of Monarch customers.

Monarch’s financial difficulties have been known for some time.

At the time of its Atol renewal in September last year, the CAA was apparently so concerned about the airline’s finances that it set up a shadow airline in case of a collapse, at a cost of £25 million.

But just before the deadline extension expired, the majority owner, Greybull Capital, announced a £165 million financial package to save the airline.

Nimmo said: “Mounting cost pressures and increasingly competitive market conditions in the European short-haul market have contributed to the Monarch Group experiencing a sustained period of trading losses.

“This has resulted in management appointing us as administrators in the early hours of this morning. While this timing is unusual in insolvency situations, it was necessary for the appointment to be made once all Monarch aircraft were on the ground.

“This only occurs in the early hours of each morning. Once the company entered insolvency, the Air Operating Certificate it needs to be able to fly was effectively suspended, which is why all outbound flights were cancelled with immediate effect.

“Our primary focus for the next 48 hours is to work with the CAA to provide the infrastructure and information needed to help the government and CAA with the safe repatriation of approximately all the 110,000 customers who are currently overseas and due to travel back to the UK within the next two weeks.

“This includes all those whose trip is not specifically covered by Atol protection.

“The CAA has provided funding to enable the group to retain a number of employees to assist us with the provision of this information.

“We kindly request that passengers who are not scheduled to travel within the next 48 hours to refer to the CAA website (monarch.caa.co.uk) in the first instance for further information. This will allow us to assist the CAA and prioritise to ensure the safe repatriation of all customers located overseas who were scheduled for immediate travel back to the UK.

“We will also be speaking to all of the group’s employees today, and commencing the process of returning the group’s leased aircraft fleet to its owners.”

Together, the group offered airline capacity of more than six million sector seats and tour operator passenger volumes of more than 200,000 per year.

The administrators had the following advice for customers:

It is likely that customers who booked a package holiday via Monarch Travel Group are Atol protected. Customers who have booked package holidays including flights with Monarch Airlines via other tour operators will likely also be Atol protected.

Customers who have booked a flight only with Monarch Airlines are not Atol protected, unless they bought their travel before 15 December 2016.

The CAA will arrange for the repatriation of Atol protected customers who are currently overseas back to the UK. The CAA has also been asked by the Department for Transport to repatriate UK customers who are currently overseas but are not protected by Atol and who are due to return to the UK within the next two weeks.

Non-ATOL protected customers may be able to claim for additional costs, such as the cost of additional accommodation, from their credit card provider.

Customers who are yet to travel may be able to claim a refund from their credit or debit card provider, or if they are Atol protected, from the CAA or their travel company if they booked through another travel provider.

The group’s engineering operation, Monarch Aircraft Engineering Limited, is not in administration and continues to trade normally.