Monarch Airlines staff are being asked for pay cuts and productivity improvements of between 25% and 35%, on top of 900 job losses from the 3,300-strong workforce, a report this morning claims.
Monarch is likely to ask members of its pension scheme to vote on accepting cuts to their retirement incomes, according to the Times.
If they decline to accept lower payouts, Monarch could hand the scheme to the Pension Protection Fund, the national safety net for insolvent schemes, where payouts for yet-to-retire employees are capped at £25,000 annually.
By some calculations, the deficit in the scheme could be more than £300 million, the newspaper claimed.
The holiday carrier’s owner, the Mantegazza family of Switzerland, has refused to absorb further losses and has declined to plug a £158 million hole in Monarch’s pension fund.
A new management team has lured private equity investors in an attempt to reinvent the business as an easyJet-style budget airline.
However, new investors have balked at meeting pension obligations under a legacy scheme offering benefits pegged to final salaries for staff including pilots, who often earn six-figure sums and retire at 55, according to the report.
The Swiss family has bailed out the company twice before, pumping £115 million into Monarch since 2010. Advisers to the family say that it is unreasonable to expect them to risk any further money.
A spokesman for Monarch’s Swiss shareholders told the Times: “We are conscious of the consequences for members of the pension scheme of any restructuring.”
The British Airline Pilots Assocation said: “We anticipate balloting our members on [changes to terms and conditions] in the next week or so.”
Monarch Group chief executive Andrew Swaffield confirmed a review of the business in an exclusive interview with Travel Weekly last month.
Swaffield said the review would focus on Monarch Airlines and made clear he had already decided to end charter flying and was likely to ditch long-haul operations.