Monarch reportedly received the bulk of money to fund a £165 million bailout a year ago from Boeing rather than from its private equity owner Greybull.
The US aerospace giant is understood to have injected the money via Monarch’s offshore holding company, Petrol Jersey Ltd.
That deal, plus a potential £60 million sale of lucrative runway slots – including 20 at Gatwick – and £48 million of cash in Monarch’s bank account, means Greybull is likely to walk away from the failure of the airline and travel group with losses that are a fraction of the £250 million shortfall it has been widely reported as facing, according to The Sunday Times.
Greybull, which also owns Scunthorpe steelworks, bought Monarch in October 2014, but terrorism in key destinations such as Egypt, Tunisia and Turkey forced it into a price war with rivals easyJet and Ryanair that triggered heavy losses.
Monarch called in administrators KPMG last Monday after failing to convince the aviation watchdog that its Atol tour operator licence should be extended. Almost 1,900 staff were made redundant.
The Civil Aviation Authority and the Department for Transport launched the “biggest peacetime repatriation” to bring back 110,000 stranded holidaymakers at a cost of at least £60 million.
Lilian Greenwood, chair of the Commons transport committee, is considering an investigation into the collapse and will call transport secretary Chris Grayling before the committee. MPs are due to debate the failure this week.
This time last year, when the CAA threatened to withdraw Monarch’s Atol, the airline narrowly avoided collapse by orchestrating the £165 million bailout, widely thought to have been funded with new cash from Greybull.
Monarch chief executive Andrew Swaffield called it the “largest investment in our 48-year history”.
However, several sources said the bulk of the money came from Boeing, released via a complex sale-and-leaseback financing deal related to the value of a fleet of new 737 Max aircraft ordered by Monarch, The Sunday Times revealed.
Monarch is reported to have secured a cut-price deal for 30 new aircraft — which later rose to 45. The market value of the aircraft was greater than Monarch’s agreed price, so creating a paper profit.
Greybull was able to persuade Boeing to release more than £100 million of this trapped equity as cash, pumping it into the airline through Petrol Jersey.
Boeing and Greybull declined to comment on the deal. However, a witness statement deposited by Swaffield at the High Court last week as part of the administration, said Monarch secured a “significant cash investment” a year ago from a “third-party industry investor” that allowed it to keep flying.
Questions have been raised about timing. Monarch went down with £48 million of cash in the bank, over which Greybull has a strong claim as primary secured creditor.
Swaffield’s statement revealed that the cash pile was shrinking rapidly and would have been £20 million by the end of the month.
Greybull’s Marc Meyohas said the timing of the collapse “was influenced by Atol, not by us running out of cash”.
Greybull said it is owed debt, equity, interest and fees totalling more than £100 million, which will be offset by the proceeds from the administration.
“The families, Greybull, Petrol Jersey, however you want to put it, will have lost money on this deal,” said Meyohas.
“We are absolutely disappointed by the outcome. We do feel we have been responsible owners, but we have failed nonetheless.”
Liberal Democrat leader Sir Vince Cable said: “The lack of transparency is shocking. Customers, staff and taxpayers deserve to know how Monarch was funded.
“If Greybull will not provide answers immediately, the government…must launch an investigation.”
More:
Monarch secures £165 million investment (2016)
Monarch Airlines goes into administration
Monarch failure: Government orders repatriation of passengers