Monarch on track for ‘double-digit million’ profit turnaround this year
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Rescued British airline Monarch is on track to make a profit “in the double-digit millions” this year, the group’s CEO Andrew Swaffield has told Travel Daily UK.
“By October we will deliver a turnaround in excess of £100 million in profit terms from last year’s losses,” he said at this week’s 2016 ABTA Convention in Costa Navarino, Greece.
This follows the April announcement that Monarch had improved its winter losses by £40 million, £10 million of which was driven by lower fuel prices but the majority (£30 million) a result of the drastic company restructure that Swaffield executed last year, just 12 weeks after taking on the CEO role.
The restructure led to annual costs being cut by £200 million as trade unions agreed to 700 redundancies and staff accepted pay cuts of up to 30%.
Swaffield also returned 10 aircraft as he switched Monarch’s model to short-haul scheduled flights only, cutting all long haul and charter services.
Swaffield described the restructure as “deep and severe”, but said he was now focused on “delivering sustainable profit”.
“We fly 10 fewer planes, but our productivity and utilisation has improved,” said Swaffield, noting 6.6 million passengers flew with Monarch this year.
“We have also improved our punctuality having halved our delayed minutes over the past year and added eight points of punctuality to our departures within 15 minutes. “We’ve reduced our carbon footprint by 20% too, so we’ve seen a series of very big changes.”
Swaffield said the future of charter, which used to represent 15% of Monarch’s air services, would now be the “domain of Tui and Thomas Cook”, as well as “specialists like Titan that provide airlift for other airlines”.
“But the charter model that Monarch had is finished and I think we will see some major restructuring in the aviation space going forward,” he said.
“There are about 86 airlines in Europe and many of them are financially unsuccessful because their cost bases are too high and they need to be restructured. Only 30 of the top 150 airlines in the world are European, which is disproportionate to the number of airlines there are in Europe.”
Swaffield anticipates more mergers and acquisitions and said Monarch would “obviously want to be a player in that activity”.
“There will be fewer players in the aviation market but those that remain will be much stronger,” he said. “It’s not necessarily going to be all about size, but cost base, brand and segmentation. If your cost base is out of control, your future is bleak.”
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