Monarch – A Company in Administration

Monarch’s Administration Affects 860,000 People – Some of Them Insolvency Practitioners!

It is a sad truism that when travel companies and/or airlines stop trading and go into administration, it tends to happen spectacularly and in the eye of the news and social media. This is because thousands of customers are often left stranded overseas, whilst many suddenly lose the holidays they have booked. In addition, staff lose their jobs and creditors are affected. Now that Monarch has stopped trading and is a company in administration, the numbers affected are frighteningly high. Not surprising, perhaps, for the 5th largest company of its type in the UK.

The repercussions and fall out will be significant as KPMG, the administrators, begin their task of unravelling the detail of what went wrong and why, and then try to do the best they can for all of those affected. We must leave any detailed comment until these details come out, and simply report on what we know has happened to date. In the meantime, Simon Parker takes a quick look at the facts as they stand at the moment, how customers will be affected and whether they will get their money back, including two from Antony Batty & Company.

Why has Monarch Gone into Administration?

The administration was actually triggered by the fact that Monarch did not survive the process for the renewal of its Air Travel Organiser’s Licence (ATOL). By law, every company involved in selling flights and/or holidays that involve flights can only do so if it holds this licence.

To renew an ATOL licence, the Civil Aviation Authority (CAA) needs to be certain a company is financially stable enough, with sufficient resources to continue trading for the next 12 months, so that its clients are not left stranded.

In Monarch’s case, it had come very close to collapse a year ago, and was rescued at the last minute. This was off the back of a £291 million loss in the year to October 2016, compared to a profit of £27 million the previous year.

Despite carrying millions of passengers per annum, the perception inside the industry is that Monarch has been struggling for years. The very rapid recent decline in its fortunes has been blamed on several factors, including:

Indeed, Monarch’s Chief Executive, Andrew Swaffield has said that although the company had been carrying 14% more passengers this year, it has done so for £100 million less revenue.

As insolvency practitioners with much experience as administrators of travel companies, we know that there is much more to come out as the administration progresses. Better to leave it until the dust settles before making any firm judgements.

These Travel Industry Administrations Always Come With Some Very Sad Stories

By their very nature, travel industry administrations leave thousands of customers on holiday stranded. Some need to get back quickly for health reasons, others for work and some have had their dream holiday ruined. It can be truly distressing. Whatever happens, work to resolve these issues has to happen very quickly.

Then there is the issue of money back and compensation. These are the key points:

Sadly, we can all get caught out, as two of our team did, or nearly did.

As an aside, we understand that from early next year travel companies will not be able to levy a surcharge on customers who book by credit card.

When a Company is in Administration, What Happens?

Inevitably, every administration is different, and things change over time as the process continues and develops. All we know from KPMG at the moment is that they have spoken to all of the company’s employees and provided them with as much assistance as possible.

Sadly, over 1,850 employees of Monarch Airlines and Monarch Travel Group have been made redundant, and the assistance given extends to helping them make their claims to the Redundancy Payments Office. In addition, the remaining Monarch HR team has been holding jobs fairs to help people get back into work, whilst a number of employers with vacancies have been in touch with the administrator, and details have been sent to the former employees via the HR team.

Monarch Aircraft Engineering Limited, the Group’s engineering operation, which employees 736 members of staff, is not in administration and, at the time of writing (3rd October, 2017) continues to trade normally.

Contact us for Help and Advice on Travel Industry Administrations

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Our team of insolvency practitioners is highly experienced as administrators for travel companies that have ceased trading. In particular, we have good relationships with the regulators, and know how they work: the CAA, ABTA and IATA. The same apples to the credit card companies. This allows us to act quickly and positively for the company in administration.

Click here for a recent testimonial for our work on a travel company administration. Call us on 0208 088 0633 or contact us for help and advice in this area.