Monarch set to return to profit this yearPosted: January 29, 2015
Monarch Group expects to return to profit this year having hit all its targets on revenue and costs in the first 100 days trading since a major restructuring.
The overhaul will enable the group to deliver double-digit earnings this year, the company said today.
Monarch also stands to benefit from the sharp fall in jet fuel prices, having un-hedged its position last September.
This compares favourably to 2014, where the group expects to incur losses of around £44 million and pre-exceptional costs of £125 million or losses of £169 million post exceptional costs, the company said today.
The airline is on track to reduce winter losses by around £20 million.
The business has been trading well in the past three months, with strong mobile bookings and other direct sales in the key period since Christmas, Monarch said.
Monarch came under new ownership last October when Greybull Capital agreed to a “significant” capital injection, taking a 90% stake in the 47-year-old company.
The restructuring involved a radical overhaul of the group’s activities to cut £200 million in annual costs and a new strategy. Capacity for 2015 is to be cut by 17% to 7.2 million.
The company is now “well on course” to create a new, European short-haul leisure network.
The first of 30 new Boeing 737 MAX8 aircraft is to enter the fleet in April 2018 in a place to fully replace its current Airbus fleet by 2020.
Each Boeing 737 MAX8 aircraft will deliver savings of up to 15% in fuel costs a year.
Key elements of the restructuring were:
- Stopping charter and long-haul flying with effect from this summer;
- Cutting the fleet from 42 to 34 aircraft;
- Revised agreements with aircraft lessors including the return of 10 aircraft from the current fleet;
- Confirmed order for 30 new Boeing 737 MAX 8s with options for growth;
- A new agreement with staff, with more than 90% of unionised employees voting to accept changes, to ensure Monarch’s work force is cost competitive;
- Resolution of the group’s pension deficit through agreement with the Pensions Regulator, with the Pension Protection Fund taking a 10% stake in the business;
- Closure of the airline’s operations from East Midlands from summer 2015 and a focus on five UK airport bases – Gatwick, Luton, Birmingham, Manchester and Leeds Bradford;
- A revised network focusing on scheduled European short-haul leisure destinations;
- Formation of a new senior executive committee with Barry Nightingale recently appointed as the group’s chief financial officer.
Sourced by Travel Weekly