The Monarch Group. Part 1: No divine right to rule the air, but a new reign has started purposefully

Monarch Airlines has one of the lowest levels of unit cost in Europe and some decent market positions on routes in its mainly sun-oriented leisure routes. Both the airline and its parent the Monarch Group returned to profit in FY2013 after a period of losses.

Nevertheless, this Monarch has no divine right to rule the air. Its margin is not enough for sustainable long term returns and 2014 is proving to be more difficult. Moreover, its earnings are very seasonal and the Group's year end FY2013 balance sheet was weak. Faced with these issues and the need to fund a planned order for 30 Boeing 737 MAX 8 aircraft, the Group appointed a new Chairman, CEO and CFO in Jul-2014 and launched a strategic review in Aug-2014.

The new management has quickly had an impact in three significant ways. First, it has committed Monarch to scheduled operations only, thereby completing its withdrawal from its original activity of charter flying. Second, it has secured union agreement to wage cuts and new working conditions and, third, it has found a new owner to invest in its future.