From todays Sunday Times..
MONARCH AIRLINES is to cut more than 1,000 jobs — about one-third of its staff — as part of a drastic overhaul to cut losses and woo new investors.
All charter and long-haul flights will be axed, and the aircraft fleet shrunk from 42 to 30.
The drastic plan has been drawn up by new chief executive Andrew Swaffield in an effort to restore the airline to profitability. Internal projections show the carrier is likely to lose about £60m this year.
The specialist American aviation advisory firm Seabury Capital is leading the hunt for new investors, with about a dozen financial players — private equity and other investment funds — in the frame.
One obstacle is Monarch’s pension black hole. A defined benefit scheme, closed to new members more than a decade ago, it still has a deficit of £158m. Talks have begun with trustees and the pensions regulator about a solution.
The 47-year-old airline is a stalwart of the British holiday scene, carrying 6m passengers a year to destinations in the Mediterranean.
It is headquartered at Luton airport and with its aircraft maintenance division and Cosmos tour-operator arm has 3,300 employees.
It is owned by Switzerland’s billionaire Mantegazza family. The Mantegazzas, who have regularly injected cash in recent years to make good losses, have accountant PwC standing by to take charge if a new investor is not found. Swaffield was recruited from British Airways’ parent company IAG to run the airline in April. He was promoted to chief executive of Monarch Group in July after the abrupt departure of executive chairman Iain Rawlinson.
Monarch declined to comment yesterday, but potential investors have been given an outline of Swaffield’s plan. He will ditch Monarch’s historic “hybrid” model, which saw it mix charter flying — one-off flights for tour operators — with scheduled services.
Charter flights will end and the company will become a budget carrier operating only scheduled flights.
Large cost cuts, to bring the airline’s overheads in line with those of big rival easyJet, are to be announced in the next few months.
Last week the airline said it would shut its base at East Midlands airport, and the base at Leeds/Bradford is also under review.
Swaffield and chairman Sir Roy McNulty — the Northern Irish businessman who has chaired the Civil Aviation Authority — hope to find new investors by Christmas. It is understood the Mantegazzas would be prepared to relinquish control if the right deal can be found.
The management are pursuing a “solvent” sale — they do not want to put the company into administration to ditch legacy costs, including the pension scheme.
Dean Street, a City investment banking boutique, is helping in the hunt for new funds, and KPMG, the accountant, has prepared an information pack for investors.
Industry experts say that, while the cost cuts are promising, Monarch will still struggle to compete against easyJet and Ryanair, the two titans of the low-cost airline world.