Monarch in turbulence
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easy wouldn't need to fill the pension deficit as a one off. They would simply carry on paying the contributions, just like IAG did and are doing with the BA DB scheme which also has a (much bigger) deficit. They are small beer for easy compared to the potential profits from the increased market shares from 4 or 5 major UK airports.
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In reply to a now deleted post that asked "Who would pay off the deficit then?":
Whoever buys Mon potentially would, unless the Pension Regulator approves a Regulated Apportionment Agreement as per BMI/Lufthansa and the scheme gets dumped into the PPF.
DB Pension "deficits" are theoretical numbers that are almost never actually paid, unless a scheme is wound up and the benefits are bought in the open market. They are required to be shown in company accounts but in reality can be repaid over decades, and if gilt yields and inflation increase they are reduced hugely or eliminated. The bigger the size of the entity buying, the less this is an issue (as per BA/IAG) as the debt can be paid off gradually.
Interestingly the UK government doesn't have to abide by such trivial accounting rules and put money aside for the state pension scheme which is effectively its own DB scheme (i.e. a guaranteed amount uplifted by inflation with no dependence on investment returns) - it simply pays the money out of tax/NI received.
Whoever buys Mon potentially would, unless the Pension Regulator approves a Regulated Apportionment Agreement as per BMI/Lufthansa and the scheme gets dumped into the PPF.
DB Pension "deficits" are theoretical numbers that are almost never actually paid, unless a scheme is wound up and the benefits are bought in the open market. They are required to be shown in company accounts but in reality can be repaid over decades, and if gilt yields and inflation increase they are reduced hugely or eliminated. The bigger the size of the entity buying, the less this is an issue (as per BA/IAG) as the debt can be paid off gradually.
Interestingly the UK government doesn't have to abide by such trivial accounting rules and put money aside for the state pension scheme which is effectively its own DB scheme (i.e. a guaranteed amount uplifted by inflation with no dependence on investment returns) - it simply pays the money out of tax/NI received.
If you said ezy was looking at buying Aer Lingus I would be greatly surprised.
If you said Monarch I'd look askance, hide the knives and change the subject.
If you said Monarch I'd look askance, hide the knives and change the subject.
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Nobody has suggested easy are looking to buy Aer Lingus have they?
What do you mean by "hide the knives"?
I'm not aware of any animosity between the two airlines. I would have thought it was more like mutual respect.
What do you mean by "hide the knives"?
I'm not aware of any animosity between the two airlines. I would have thought it was more like mutual respect.
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The problem is if any bases were over crewed then those displaced would cause base transfer lists to be frozen and will be given priority on regional bases when some of have been waiting years to get home will be stuck away for a long time to come. For purely selfish reasons I hope we do not get involved with MON. Besides it would be odd to see those who left us for the green grass of MON return to the big easy.
I could see some people unhappy about the pension situation if they had a FSP when the rest of us have a pretty crappy deal but those would be in the minority. If any widespread animosity occurred it would be if the share price were damaged by it. With the shares people are worryingly short sighted. They would not see the long term potential benefits of a merger and they will only see the headlines and the initial share price drop which they will not forget.
I could see some people unhappy about the pension situation if they had a FSP when the rest of us have a pretty crappy deal but those would be in the minority. If any widespread animosity occurred it would be if the share price were damaged by it. With the shares people are worryingly short sighted. They would not see the long term potential benefits of a merger and they will only see the headlines and the initial share price drop which they will not forget.
Rushed Approach
"What the captain really means" is that he has realised that he in the company of someone who is quite likely given to irrational acts
If you said Monarch I'd look askance, hide the knives and change the subject.
I'd hide the knives because I'd suspect mental instability.
With over £600m in cash in the bank and a 70% owned outright fleet there's always speculation about easyJet taking over small loss-making airlines like Lingus and Monarch.
It never happens. It will never happen.
Its an expensive and complicated way of doing something it can do cheaply and simply.
With over £600m in cash in the bank and a 70% owned outright fleet there's always speculation about easyJet taking over small loss-making airlines like Lingus and Monarch.
It never happens. It will never happen.
Its an expensive and complicated way of doing something it can do cheaply and simply.
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Well, you say it never happens, and then you look at TEA Switz and Go, and in RYR's case Buzz and now Cypriate. It does happen if the bosses want it to, and seemingly regardless of the logic. Buying a company for hundreds of millions when you could wait a little longer and buy it for a dollar seems odd, but we mere mortals are rarely privvy to the details discussed behind locked, and often padded, doors.
I'm really hoping that things turn around quickly. Mon always appeared to be a company that had an amount of respect for its crew, at least it looks that way from the outside. It'd be a shame if it's only the gutter airlines that thrive.
I'm really hoping that things turn around quickly. Mon always appeared to be a company that had an amount of respect for its crew, at least it looks that way from the outside. It'd be a shame if it's only the gutter airlines that thrive.
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WWW, you may well be correct, but please indulge me as to how it can be done "cheaply and simply"?
Mon could transform most elements of its cost base into easy's (or into less than easy's) very quickly, at the flick of a switch in the current situation. Other elements might take a bit longer, but while Mon remains easy are losing the profits on the market share of the routes it retains, which means that any delay is in effect costing easy money.
Mon could transform most elements of its cost base into easy's (or into less than easy's) very quickly, at the flick of a switch in the current situation. Other elements might take a bit longer, but while Mon remains easy are losing the profits on the market share of the routes it retains, which means that any delay is in effect costing easy money.
Last edited by Rushed Approach; 24th Aug 2014 at 20:47.
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Same aircraft types exactly though as with GB - and easy having to use extra capacity this summer on B757s - a few A321s could easily be used initially (as per GB) and then phased out as their existing 319/320 orders catch up.
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Well the simplest and cheapest way would be to let them go under and mop up the aftermath with very little of the costs. Buy the jets, hire some of staff on EZ contracts and operate the new routes or increase frequencies on the current routes. There's no way they can morph into a ULCC like EZ or FR with a lower cost base as the crew costs are much higher, they don't have the economies of scale and haven't quite achieved critical mass and they don't have the brand awareness. They can transform into an ULCC but the cost base will never be as low as EZ/FR.
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Notwithstanding the stress and concern this uncertainty is causing Monarch employees I fail to see what the advantages would be for easy. The slots they would pick up at LGW are OK but after acquiring Flybe slots a year ago and the pressure on yields at the moment is it what the company need? As for market share at regional airports that can be acquired without the complication of a takeover. The only plus point is there is an awful lot of money sloshing around hangar 89 and the CEO hasn't ticked the corporate M&A box on her CV.
Lastly all has been very quiet from Stelios over the last couple of years. He is getting a nice check every year and the company have elected a cautious approach to expansion. In return he has remained quiet and the markets are looking at us as a proper grown up company. If we toss a few hundred million away to takeover M what do you think his reactions will be?
Lastly all has been very quiet from Stelios over the last couple of years. He is getting a nice check every year and the company have elected a cautious approach to expansion. In return he has remained quiet and the markets are looking at us as a proper grown up company. If we toss a few hundred million away to takeover M what do you think his reactions will be?
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I would suggest that Mon can transform into anything it wants to in the current situation, and can easily compete even more successfully with easy than it does now, with lower crew costs than easy if required.
You say that market share can be acquired at regional? airports (i.e. at MAN, LGW, LTN and BHX in Mon's case) without the complications of a takeover but exactly how is that achieved with the competitor still there and without a price war that will cost?
As I say easy might rue the day it didn't take the opportunity. Of course if easy's policy is simply to be "grown up" and to consolidate then there is even more chance the Mon turnaround will succeed I suppose? I see that easy still has the same 200 aircraft it had three years ago so maybe the "consolidation" view is correct?
You pays your money and takes your choice ....
You say that market share can be acquired at regional? airports (i.e. at MAN, LGW, LTN and BHX in Mon's case) without the complications of a takeover but exactly how is that achieved with the competitor still there and without a price war that will cost?
As I say easy might rue the day it didn't take the opportunity. Of course if easy's policy is simply to be "grown up" and to consolidate then there is even more chance the Mon turnaround will succeed I suppose? I see that easy still has the same 200 aircraft it had three years ago so maybe the "consolidation" view is correct?
You pays your money and takes your choice ....
Last edited by Rushed Approach; 24th Aug 2014 at 19:42.
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taking over small loss-making airlines like Lingus and Monarch.
Rushed Approach WWW, you may well be correct, but please indulge me as to how it can be done "cheaply and simply"?
Mon could transform most elements of its cost base into easy's (or into less than easy's) very quickly, at the flick of a switch in the current situation. Other elements might take a bit longer, but while Mon remains easy are losing the profits on the market share of the routes it retains, which means that any delay is in effect costing easy money.
Mon could transform most elements of its cost base into easy's (or into less than easy's) very quickly, at the flick of a switch in the current situation. Other elements might take a bit longer, but while Mon remains easy are losing the profits on the market share of the routes it retains, which means that any delay is in effect costing easy money.
Airbus. OK.
Easy. Ring Ring, hello CTC or OATS can i have twenty new first officers please delivered on Wednesday?
The School : yes here's ten dozen to choose from.
Cheap. Simple.
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One thing is for sure, the Monarch pension fund is doomed. Look at BMI.... one multi billion dollar business (Lufty) can sell a small(ish) airline (BMI) to another multi billion dollar business (IAG) and dump the pension fund into the PPF in the process.... then surely the same could ( will, in my opinion ) happen to Monarch.
All those long serving Monarch pilots who are expecting final salary pensions of 50/60/70+k will be most affected by the cap of 36k (ish. I can't remember the actual figure.)
I'm not trying to worry you guys, but it is a real possibility.
Am I bitter about the BMI situation? Yes. Very.
All those long serving Monarch pilots who are expecting final salary pensions of 50/60/70+k will be most affected by the cap of 36k (ish. I can't remember the actual figure.)
I'm not trying to worry you guys, but it is a real possibility.
Am I bitter about the BMI situation? Yes. Very.
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Rushed Approach -
No Monarch cannot easily transform into an ULCC.
And no they are clearly not already successfully competing with easyJet, hence the massive downsizing and restructuring.
And no easyJet does not have the same 200 aircraft it had 3 years ago.
Rather than buy the whole thing out, warts and all, I suspect easyJet will cherry pick the best slots/routes that become available in a controlled manner. They will use the very cheap A320 on order, and a ready supply of flexi cadets both of which can be tailored to specific numbers.
I cannot see an advantage to taking on all those expensive crew and ageing aircraft all at once - it's just a giant headache. What would easyJet do with all your management, ops, hr etc? Go through an expensive redundancy programme?
Amidst worries of overcapacity in the market, it is a good thing for easyJet to see it reduced so they can increase yields rather than retaining that extra capacity for the sake of it. Especially as Monarch shares most it's routes with easyJet.
Talk is of Wizz Uk!
No Monarch cannot easily transform into an ULCC.
And no they are clearly not already successfully competing with easyJet, hence the massive downsizing and restructuring.
And no easyJet does not have the same 200 aircraft it had 3 years ago.
Rather than buy the whole thing out, warts and all, I suspect easyJet will cherry pick the best slots/routes that become available in a controlled manner. They will use the very cheap A320 on order, and a ready supply of flexi cadets both of which can be tailored to specific numbers.
I cannot see an advantage to taking on all those expensive crew and ageing aircraft all at once - it's just a giant headache. What would easyJet do with all your management, ops, hr etc? Go through an expensive redundancy programme?
Amidst worries of overcapacity in the market, it is a good thing for easyJet to see it reduced so they can increase yields rather than retaining that extra capacity for the sake of it. Especially as Monarch shares most it's routes with easyJet.
Talk is of Wizz Uk!
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Monarch in turbulence
I'd like to pause all speculation for a moment and thank all my former co-workers at Monarch Airlines for what was quite possibly "the time of my life". Best of luck and thanks for everything. (I left in 2004)
Last edited by Brenoch; 27th Aug 2014 at 15:18.
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The office staff will just be taken on and given fancy new titles with the Monarch office block becoming Hangar 89A. Office staff never suffer at EZY. Cuts only hit the front liners so the Luton HQ will become even more bloated with bonus chasers, career boys and girls and MBAs.