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| The collapse of Monarch: inside the doomed airline in its last days | The collapse of Monarch: inside the doomed airline in its last days |
| (4 months later) | |
| As managers scrambled to save the firm, there were few clues anything was awry – it was even still holding recruitment days | |
| Gwyn Topham and | |
| Rachel Obordo | |
| Sat 7 Oct 2017 07.00 BST | |
| Last modified on Mon 27 Nov 2017 15.48 GMT | |
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| In the week running up to the collapse of Monarch Airlines, one crew member noticed that something was awry. The soap had run out on a flight back to Gatwick and a request to replenish supplies was left unanswered. A few days later, on Monday this week, Monarch was no more: almost 2,000 staff would be laid off and the travel plans of 860,000 passengers would be disrupted. | In the week running up to the collapse of Monarch Airlines, one crew member noticed that something was awry. The soap had run out on a flight back to Gatwick and a request to replenish supplies was left unanswered. A few days later, on Monday this week, Monarch was no more: almost 2,000 staff would be laid off and the travel plans of 860,000 passengers would be disrupted. |
| Her concerns about toiletries aside, Shelley Matthews didn’t notice serious problems at the carrier, despite rumours and past financial uncertainty. “They told us we were going to go long haul and we were due to have brand new uniforms next year. We even had a huge recruitment day in Brighton two weeks ago,” she said. | Her concerns about toiletries aside, Shelley Matthews didn’t notice serious problems at the carrier, despite rumours and past financial uncertainty. “They told us we were going to go long haul and we were due to have brand new uniforms next year. We even had a huge recruitment day in Brighton two weeks ago,” she said. |
| Other recruitment events were scheduled in Birmingham and Luton, with hundreds of young people told to bring CVs to apply for their dream jobs – even as the airline’s bosses fought to keep the business afloat. | Other recruitment events were scheduled in Birmingham and Luton, with hundreds of young people told to bring CVs to apply for their dream jobs – even as the airline’s bosses fought to keep the business afloat. |
| Monarch had, of course, needed rescuing before. Its sale in 2014 to Greybull, a private equity firm, came wrapped up in redundancies and pay cuts. Optimistic plans, including a new Boeing 737 fleet, were put in place. But recovery was thwarted by terror attacks, a weak pound after the Brexit vote, and ferocious competition. By 1 September, the management team was desperate. Accountants at KPMG were called in to lay out the options and Monach had to inform the regulator, the Civil Aviation Authority. | Monarch had, of course, needed rescuing before. Its sale in 2014 to Greybull, a private equity firm, came wrapped up in redundancies and pay cuts. Optimistic plans, including a new Boeing 737 fleet, were put in place. But recovery was thwarted by terror attacks, a weak pound after the Brexit vote, and ferocious competition. By 1 September, the management team was desperate. Accountants at KPMG were called in to lay out the options and Monach had to inform the regulator, the Civil Aviation Authority. |
| Only four weeks remained until a significant deadline, the renewal of the Atol licence – which compensates passengers in the event of a travel operator collapsing – for the company’s Monarch Holidays unit. Atol cover is a legal requirement which the CAA would only grant if assured the company was financially viable. | Only four weeks remained until a significant deadline, the renewal of the Atol licence – which compensates passengers in the event of a travel operator collapsing – for the company’s Monarch Holidays unit. Atol cover is a legal requirement which the CAA would only grant if assured the company was financially viable. |
| Monarch’s previous dalliances with collapse had woken the CAA up to the need for contingency plans, honed over the last three years. Contracts were already in place with a host of carriers, from international names to providers of so-called wet-lease services, where fully crewed planes operate on behalf of another airline. By mid-September, they were being put on standby. | Monarch’s previous dalliances with collapse had woken the CAA up to the need for contingency plans, honed over the last three years. Contracts were already in place with a host of carriers, from international names to providers of so-called wet-lease services, where fully crewed planes operate on behalf of another airline. By mid-September, they were being put on standby. |
| Still, Monarch flew on, and bookings were taken, as its prospects looked increasingly grim. Investors were approached and rivals such as easyJet were sounded out about the possibility of a sale. A new company, Shelfco, was set up, to hive off the prospective long-haul Monarch and its costly Boeing orders. | Still, Monarch flew on, and bookings were taken, as its prospects looked increasingly grim. Investors were approached and rivals such as easyJet were sounded out about the possibility of a sale. A new company, Shelfco, was set up, to hive off the prospective long-haul Monarch and its costly Boeing orders. |
| Meetings took place with the government, in the vain hope that a bridging loan could see it through the winter. The summer season, when airline coffers should bulge, had seen slim pickings, but Monarch still had money in the bank. | Meetings took place with the government, in the vain hope that a bridging loan could see it through the winter. The summer season, when airline coffers should bulge, had seen slim pickings, but Monarch still had money in the bank. |
| By Friday 29 September, all eyes were on the regulator – but only because of the entirely separate crisis at Ryanair. While the public demanded action to compensate Ryanair passengers, the CAA was sitting on an even bigger powder keg. An insider said: “Monarch was moving only in one direction. But even on Friday there were ongoing conversations.” Meanwhile, planes were starting to relocate from Qatar Airways, ready to step in. | By Friday 29 September, all eyes were on the regulator – but only because of the entirely separate crisis at Ryanair. While the public demanded action to compensate Ryanair passengers, the CAA was sitting on an even bigger powder keg. An insider said: “Monarch was moving only in one direction. But even on Friday there were ongoing conversations.” Meanwhile, planes were starting to relocate from Qatar Airways, ready to step in. |
| On Saturday night, the decision was taken to pull the plug. The CAA extended the Atol licence for 24 hours and triggered the rest of its contingency plans: building a website; collecting passenger data from Monarch; getting flight planners to secure airport slots to operate another 700 flights in the next fortnight to return passengers to the UK. Monarch’s fares were hiked overnight to deter customers from booking – although many still did. | On Saturday night, the decision was taken to pull the plug. The CAA extended the Atol licence for 24 hours and triggered the rest of its contingency plans: building a website; collecting passenger data from Monarch; getting flight planners to secure airport slots to operate another 700 flights in the next fortnight to return passengers to the UK. Monarch’s fares were hiked overnight to deter customers from booking – although many still did. |
| On Sunday morning, Monarch’s chief executive, Andrew Swaffield, instructed crew to keep calm and carry on despite “speculation”, emailing: “Let’s show everyone that we are made of strong stuff here at Monarch.” | On Sunday morning, Monarch’s chief executive, Andrew Swaffield, instructed crew to keep calm and carry on despite “speculation”, emailing: “Let’s show everyone that we are made of strong stuff here at Monarch.” |
| Then, after flight ZB3785 from Tel Aviv landed in Manchester at 3.29am on Monday, the death of Monarch was declared. At 4am KPMG announced the airline was insolvent; minutes later, the government proclaimed the UK’s “biggest ever peacetime repatriation” under way to fly 110,000 passengers home. Within hours, the first had returned, only on a differently labelled plane, costing the taxpayer £545 per ticket. | Then, after flight ZB3785 from Tel Aviv landed in Manchester at 3.29am on Monday, the death of Monarch was declared. At 4am KPMG announced the airline was insolvent; minutes later, the government proclaimed the UK’s “biggest ever peacetime repatriation” under way to fly 110,000 passengers home. Within hours, the first had returned, only on a differently labelled plane, costing the taxpayer £545 per ticket. |
| For those in the UK, ready to fly out, there was little to soften the blow, administered by text message. Many passengers had arrived at airports, seeing their flights cancelled minutes before they were due to board. Staff, meanwhile, had been emailed with the news and asked to attend 9am meetings across the country, to be told they were being laid off. | For those in the UK, ready to fly out, there was little to soften the blow, administered by text message. Many passengers had arrived at airports, seeing their flights cancelled minutes before they were due to board. Staff, meanwhile, had been emailed with the news and asked to attend 9am meetings across the country, to be told they were being laid off. |
| Administrators expect it will take several weeks before creditors’ losses are unpicked. The 110,000 people abroad bailed out by the government increasingly look like the lucky ones, while many more customers negotiate alternatives and chase refunds for vanished flights. As Matthews notes, the redundancies don’t cover “youngsters who had just been offered jobs and were very excited to start. Now that’s all gone.” | Administrators expect it will take several weeks before creditors’ losses are unpicked. The 110,000 people abroad bailed out by the government increasingly look like the lucky ones, while many more customers negotiate alternatives and chase refunds for vanished flights. As Matthews notes, the redundancies don’t cover “youngsters who had just been offered jobs and were very excited to start. Now that’s all gone.” |
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