£125m rescue package for Monarch

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Published: Saturday 25th October 2014 by The News Editor

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Monarch Airlines has agreed a rescue deal which will see an investment firm pumping more than £100 million into the company, but also involves pay cuts of up to 30% for staff and hundreds of redundancies.

The company said it had secured £125 million of permanent capital and liquidity facilities from Greybull Capital, anchored by a £50 million capital commitment.

Greybull acquired 90% ownership interest in the company, with the remaining 10% passing to Monarch’s defined pension scheme and ultimately the Pension Protection Fund.

The Civil Aviation Authority has renewed Monarch’s ATOL licence.

Under the new arrangements, the fleet will be “optimised” from 42 aircraft to 34, and long-haul and charter flying will end by April. The network will specialise in Monarch’s “heartland” of scheduled short-haul European leisure routes.

Staff have agreed reductions in pay of up to 30%, with more than 90% of unionised staff voting to accept changes, and 700 redundancies, two-thirds of which were voluntary.

Monarch chief executive Andrew Swaffield said: “I am delighted to welcome the Greybull team as the new owners of the Monarch Group. We have a shared vision for the strategic direction and prospects for the business, and I am looking forward to working with them to implement the exciting plans for building our future.”

Speaking on behalf of the selling shareholders, Fabio Mantegazza said: “We are very proud to have created one of the most loved aviation brands in the UK over the last 46 years. We think that now is an appropriate time to allow new shareholders to take Monarch into the future with secure financial backing and clear strategic goals, and we wish the group every success.”

Jim McAuslan, general secretary of the British Airline Pilots Association (Balpa), said: “Monarch’s continuing presence in the marketplace is good for customers so this new investment is welcome. We have met with the new owners and look forward to working with them to secure quality jobs in a strong and growing company.

“The investment is in no small part due to the painful sacrifices made by pilots and other staff, who have accepted redundancies and a substantial cut in pay and conditions to help secure jobs.

“And the announcement comes with a further sting in the tail with the proposed entry of the pension scheme into the Pension Protection Fund. This will mean more pain with many innocent scheme members losing a significant amount of their pensions. Balpa will leave no stone unturned in securing justice for those affected, including pressing the Government to change the pension cap rules which unfairly hurt honest savers.”

Published: Saturday 25th October 2014 by The News Editor

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