Profits at Monarch will plateau next year but 2018 will be “transformative” for the business, according to its chief executive.
The travel group last week reported a 35% drop in annual profits to £48 million for the year to October 31, compared with £74 million in 2015.
Andrew Swaffield said he expected exchange rates and oil prices to stay broadly the same over the next 12 months, and prices for customers to remain low.
“2015 was a record year for us and we have to acknowledge a 15% reduction in the pound is staying so we have to reassess expectations,” he said.
Monarch was thrown a lifeline in October when it secured a £165 million investment from majority shareholder Greybull Capital.
“The investment gives us a very secure base from which to trade and gives confidence to partners, stakeholders and customers,” Swaffield said. “It’s about making sure Monarch is as well-capitalised as any other major airline so we can focus on growth.”
The airline is due to take delivery of the first of 30 new aircraft in early 2018 and has an option to order a further 15. The new aircraft will cut the airline’s cost base by reducing its £130 million annual fuel bill by about a quarter and maintenance costs by 80%.
“We’re expecting between £45 million and £50 million in profits next year,” he said.
“In 2018 we take delivery of our first Boeing 737 MAX-8s, which represents a 24% fuel saving, so that’s going to be transformative economically for Monarch.”
Swaffield said the UK ban on flights to Sharm el-Sheikh was not something the business could “completely compensate for”. Holidays to the Egyptian resort had made up 10% of its business.
But he said Monarch would “relook” at the destination when the travel advice is relaxed.