Home news Monarch lands short-haul bid from easyJet

Monarch lands short-haul bid from easyJet

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Monarch Airlines has landed bids for parts of its struggling short-haul business from rivals including easyJet and WizzAir as it seeks to extricate itself from a bitter industry price war.

Sky News has learnt that a pack of airlines tabled proposals this week to partner with or take ownership of Monarch’s short-haul operations.

The offers were lodged just days after it emerged that the British travel group was plotting a radical overhaul of its strategy, underlining the urgency with which it is trying to find a new home for the division.
Monarch’s board and shareholders believe the company, which needed rescuing with a huge cash injection this time last year, could have a profitable future as a long-haul carrier.
The company, which employs more than 2500 people, is in talks with regulators about the annual extension of its tour operator’s licence, which expires on Saturday.
Sources said that Monarch had discussed its plans “at length” with the Civil Aviation Authority (CAA), adding that they did not expect it to need the 12-day extension to land its ATOL licence that was required in 2016.
Sky News revealed last week that Monarch, which is expected to carry more than six million passengers this year, has been working with KPMG on options for its short-haul business through a joint venture or feeder deal with another airline.
Sources said that Wizz Air, which focuses on Central and Eastern Europe, may be interested in Monarch partly as a short-cut to gaining a UK-based Air Operator’s Certificate (AOC).
Wizz Air has already said that it is working on an application for such a licence, although it would not be interested in the bulk of Monarch’s short-haul network.
EasyJet, which declined to comment, and Norwegian Air Shuttle also tabled bids for parts of the Monarch business this week, according to insiders.

Image: Monarch, which has its headquarters at Luton Airport, employs around 2,800 people
A solution could see a rival acquiring the Monarch Airlines subsidiary which operates its short-haul business, leaving the parent company free to organise a fleet deal suitable for its long-haul ambition

While the package holiday business which requires an ATOL licence represents only about 5% of Monarch’s revenues, a failure to renew it would disappoint the airline.
A CAA spokesman said: “We do not comment on the financial situation of any individual ATOL travel companies.”In a statement, a Monarch spokesman said: “In recent months we have undertaken, and continue to undertake, a comprehensive review of Monarch designed to determine its optimal future shape, size and strategy.
“We are having regular discussions on a number of options with potential strategic partners and we will announce any material developments, if and when they happen.”
The latest potential overhaul of Luton Airport-based Monarch comes a year after the airline secured a £165m rescue package led by Greybull Capital, its controlling shareholder, and Boeing, the aircraft manufacturer.
Monarch’s most recent financial statements revealed accounting losses for the year to last October of £317m, although much of this related to aircraft leasing contracts.
The company is also expected to lose money this year amid difficult trading after terrorist attacks in European markets such as Spain, which counts as a key destination for Monarch.
A significant element of the rescue deal secured a year ago was a revised fleet purchasing agreement with Boeing for 45 new aircraft.
Under their restructured purchase agreement, Monarch can enter into sale-and-leaseback arrangements for the planes, which are expected to come into service from next spring.
Monarch’s chief executive, Andrew Swaffield, reacted angrily last month to a suggestion made by Michael O’Leary, Ryanair’s combative boss, that the British airline would struggle to make it through the winter.

Source: Sky News