Monarch's reign ends in insolvency

Monarch Airlines
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It’s the UK's biggest-ever peacetime airlift: after Monarch Airline’s 4am collapse, 110,000 Brits are stranded abroad. The Civil Aviation Authority (CAA) has now mobilised to bring them home.

Essentially, it’s the Dunkirk of package holidays.

It comes after the failed tour operator and airline’s administrators grounded its planes at 4 am on Monday morning. Explaining the decision KPMG, appointed administrator for Monarch, said the airline’s Air Operating Certificate had been suspended as a result of the insolvency proceedings, rendering it unable to fly.

In a statement, Blair Nimmo, partner at KPMG and joint administrator to the companies, explained Monarch’s collapse: “Mounting cost pressures and increasingly competitive market conditions in the European short-haul market have contributed to the Monarch Group experiencing a sustained period of trading losses.”

That’s why, Nimmo said, Monarch’s management appointed KPMG as administrators in the early hours of Monday morning.

Nimmo acknowledged the strange timing but explained that it was a necessary step as the appointment had to be made once all Monarch aircraft were on the ground.

“This only occurs in the early hours of the morning,” he said. “Once the company entered insolvency, the Air Operating Certificate it needs to be able to fly was effectively suspended, which is why all outbound flights were cancelled with immediate effect.

“Our primary focus for the next 48 hours is to work with the Civil Aviation Authority to provide the infrastructure and information needed to help the government and CAA with the safe repatriation of approximately all the 110,000 customers who are currently overseas and due to travel back to the UK within the next two weeks.”

Consumers were still able to buy tickets up until this weekend, despite the airline’s incipient collapse. The Department for Transport (DfT) has come under criticism for not effectively notifying travellers.

In a statement, a DfT spokesperson responded: “This was a decision made by the company and it is the job of directors and their advisers to decide when a business is no longer a going concern … It is the not the role of government to decide on the viability of a business.”

As KPMG begins to untangle the stranded passenger mess, the airline’s administrator will also deal with 2,100 of the Monarch Group’s former employees and oversee the return the process of returning the group’s leased aircraft fleet to its owners.

About Francois Badenhorst


I'm AccountingWEB's business editor. Feel free to get in touch with comments, tips, scoops or irreverent banter. 


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03rd Oct 2017 13:58

help the government and CAA with the safe repatriation of approximately all the 110,000 customers

Surely the word "approximately" is both redundant and should not even be considered in this case. The CAA are partly responsible for those stranded passengers, anyway.

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By ashbury
04th Oct 2017 10:10

So if they now have to charter aircraft to repatriate Monarch clients, why don't they temporarily reinstate the operations certificate and charter the airline's own aircraft? Why do we always have to make things so bloomin' complicated in the UK?

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to ashbury
04th Oct 2017 10:28

Precisely. One wonders at what cost were the replacement craft rented and would it have been more expedient and cost effective just to use the existing Monarch craft as you say....but what do we know....follow the money

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04th Oct 2017 10:13

So if they had to wait until all aircraft were on the ground they must have known well beforehand (conveniently asking for 24 hours extension in order to sell more package deals). that they were insolvent. Or did the bank foreclose. I presume KPMG had someone on hand at 4 in the morning to take instructions.

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04th Oct 2017 10:45

That is where a race to the bottom will always end.
Cheapest is very rarely best.

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04th Oct 2017 11:01

NIce overtime for KPMG sitting around all weekend and then taking up appointment at 4am.

Based on the last big collapse some aircraft may have been sequested by creditors abroad

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04th Oct 2017 11:07

It's amazing isn't it that the CAA can commission the use of aircraft in this type of situation but poor Mr Ryanair has to cancel flights rather than use the same methodology.

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