Monarch bought by Greybull Capital

Luton-based airline and leisure travel firm Monarch has been bought by investment firm Greybull Capital, which says it will inject £125 million into the business. Greybull now has a 90% stake in the Birmingham based airline, while the rest was passed onto its pension scheme.

The rescue deal now places Monarch in a much stronger position to compete against EasyJet, Ryanair and other budget carriers.

The acquisition ends the Mantegazza family ownership of the company it founded in the 1960s. Since 2009, the family has invested £115 million in the business.

In a statement, Monarch said it has secured £125 million of permanent capital and liquidity facilities provided by Greybull and the Mantegazza family. It added that the Civil Aviation Authority renewed its ATOL license. ATOL (Air Travel Organizer’s License) is a financial protection scheme.

With its new CEO, Andrew Swaffield, Monarch says it has undertaken a comprehensive strategic review of the whole business “from operations to ownership and financing.”

Monarch owns the Cosmos holiday brand and flies 7 million passengers each year.

Mr. Swaffield, said of the deal:

“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.”

“I would personally like to thank all Monarch employees who have been hugely supportive of the initiatives which were essential to complete this transaction.  I am very proud to be leading such a team – together we will be building a great future for the Group.”

Pay cuts, layoffs and smaller fleet

As part of its strategy to shift from being a charter flight operator towards a budget airline model, Monarch says it is reducing its fleet from 42 to 34 aircraft. By April it will only be flying within Europe.

The company said an agreement had been reached with employees to reduce salaries by up to 30% and lay off 700 workers.

It also confirmed the $3.1 billion order of thirty 737 MAX 8 aircraft from Boeing, with deliveries starting in 2018.

Fabio Mantegazza, on behalf of the selling shareholders, 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.”