Troubled group says it is making good progress to cut costs ahead of planned takeover in two weeks’ time. Ian Taylor reports
Monarch is “on track” to complete a group restructure and cut more than 900 jobs by October 24 when new owner Greybull Capital is due to take over from long-time owners the Mantegazza family.
The group declined to give further details ahead of the deadline as it rushes to meet the conditions of the £75 million share purchase agreement with Greybull announced last month.
But the agreement is conditional on Monarch delivering a series of cost-cutting measures and not just reductions in headcount and wages. Monarch has already said the fleet will be cut from 42 aircraft to 30.
No changes are expected to the group’s executive committee, which includes group managing director Phil Boggon, chief commercial officer Adrian Tighe
and chief operations officer Nils Christy.
But redundancies extend to senior management, with departures expected imminently.
The company is seeking 904 redundancies, including compulsory job losses, but expects about two-thirds to be voluntary.
However, a spokeswoman said: “We don’t want everyone to go.”
The October 24 deadline coincides with Monarch’s move from its summer to winter schedule and would see the Mantegazzas exit and Greybull in control for the start of the new financial year on November 1.
The rush to complete the process and axe one in three jobs has the support of unions representing Monarch Airlines and engineering staff.
Pilots’ union Balpa and cabin crew and engineering union Unite issued a joint statement with Monarch announcing staff support for pay cuts and changes in working conditions last month, a day after group chief executive Andrew Swaffield identified Greybull as preferred bidder.
Monarch reported the pay cuts as “up to 30%”. Unite’s Oliver Richardson, national officer for civil air transport, told Travel Weekly: “All groups are taking significant pay cuts. For crew, the big cuts are [in] variable pay associated with flying and basic pay for senior crew.
“Main crew cannot have the same cuts to their basic as it would be below the legal minimums, but their variable [pay] is a higher proportion of their total income. Engineers face similar cuts to pilots.”
Staff at Monarch Travel Group, which comprises Cosmos, Somewhere2stay and Avro, are undergoing the same process.
However, the spokeswoman insisted: “The mood is quite upbeat. Everyone is focused on October 24.”
Richardson said: “We’re faced with the real prospect of all jobs being at risk if the company went into administration.”
It is understood Phil Boggon has met tour operators and other Monarch partners to discuss future arrangements, with meetings held at Abta’s recent Travel Convention.
However, one prominent tour operator said he had heard nothing from Monarch.
Venture capital firm Greybull has not invested in travel before, having focused on manufacturing and engineering, but has invested in leisure businesses such as a computer games retailer.
Greybull founder and former investment banker Marc Meyohas said of Monarch: “We need to have a low cost base and have the right fleet.”
Monarch reported a pre-tax profit of £5.9 million last year following a 15% rise in turnover to £957 million.
Monarch Airlines carried 6.1 million passengers and Monarch Travel Group 911,000, with the airline contributing 60% of revenue.
The small profit followed several years of losses during which the Mantegazza family injected £115 million into the group.
Executive chairman Iain Rawlinson, who took over in 2009 and led several turnarounds, stood down in July.
Swaffield joined Monarch Airlines as managing director in March and took over as group chief executive in July.