9 OCTOBER 2017

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Article from BTNews 9 OCTOBER 2017

COMMENT: Death of an airline

The end of Monarch Airlines is a blow for our industry but it could have been worse. The CAA has been shown to be capable of some fancy footwork when needed. Now comes the hangover as rumours mount about how Monarch was run and what effect the collapse will have on other low-cost carriers and the future of cheap flights.

The pot was stirred shortly after Monarch went into administration by stories about the behaviour of its CEO, Andrew Swaffield, and his salary. Then yesterday John Collingridge in The Sunday Times called into question the true nature of the arrangements between the airline and its “secretive” owner, private equity firm Greybull Capital, alleging Greybull “drastically cut its exposure to losses (following the collapse) through a back-door deal with aerospace giant Boeing”.

That word “secretive” may have rung a bell with readers.  BTN  was suspicious of the original deal three years ago, writing in the 24 September 2014 issue: “Following news that Monarch Airlines and its associated companies are for sale, Monarch has confirmed secretive Greybull Capital as the preferred bidder and expects a deal to be finalised by the end of October.”

The story went on: “Greybull is a very private company, London-based and run by the American brothers Nathaniel (ex-Lehman) and Marc Meyohas. Greybull backed the abortive buyouts of Comet, the electrical goods chain; Game Group, the computer games retailer; and Rileys, the snooker hall business.  BTN was unable to contact.”

Yesterday’s piece by Collingridge went on: “The Sunday Times can reveal that Monarch received the bulk of the money to fund a £165m bailout one year ago from the Chicago-based plane maker — not from its private equity owner Greybull.

Boeing is understood to have injected the money via Monarch’s offshore holding company, Petrol Jersey Ltd.”

That deal, the paper added, plus a potential £60m sale of lucrative runway slots and £48m of cash in Monarch’s bank account, “means Greybull is likely to walk away with losses that are a fraction of the £250m shortfall it has been widely reported as facing”.

Reaction from Greybull and/or Boeing was not immediately forthcoming.

On the brighter side meanwhile, the CAA said yesterday more than 60% of holidaymakers left overseas when Monarch collapsed have now flown back to the UK. The authority said it had chartered or leased more than 350 flights up to yesterday morning and added that the vast majority of the 110,000 passengers who were on holiday and booked to fly home with the airline when it went into administration will be back in the UK by next weekend.

CAA head Dame Deidre Hutton told the BBC the authority could not act before Monarch's announcement, even though it was known the firm was in difficulty. “The regulator really can't step in until a company goes into administration, that is completely a matter for the company directors,” she said. “It would be neither possible nor legal for us to give out confidential financial information while a company is still operating legally.”

She explained that Monarch had leased, not owned, aircraft and as soon as the company went into administration, the owners took them back – “that's why we've had to acquire planes from 16 different countries".

Customers currently overseas and due to fly home between now and 15 October were being advised yesterday they would be brought back to the UK at no cost to them and there was no need to cut short a stay.  How the cost affects the industry insurance scheme known as ATOL remains to be seen.

A special website has been established to keep passengers up to date. In the meantime, the muddy waters swirl on. 

https://monarch.caa.co.uk

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