Monarch hits performance targets in first 100 days

- Revenues and cost savings on track

- Return to profit this year

- Revised European short-haul leisure network

- 2015 focus on sustainable profits

Monarch Group, the European leisure airline, 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 last year. The company is well on course to create a new, European short-haul leisure network which better serves the needs of its customers.

Monarch came under new ownership on 24 October 2014, when Greybull Capital LLP, agreed to inject significant new capital and take a 90% stake in the 47-year-old company. The restructuring involved a radical overhaul of the Group's activities, a range of measures to remove £200 million in annual costs out of the business and a new strategy.

The key elements of the restructuring were:

• Stopping charter and long-haul flying with effect from summer 2015;
• 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 8 aircraft with options for growth;
• A new agreement with the employees, with more than 90% of unionised staff 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 (PPF) 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 - London Gatwick, London 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 CFO.

Monarch's strategic goal is to be a modern, focused, European, scheduled leisure carrier with low costs; to build on the great Monarch brand; to develop its excellent people; and to deliver top class service for customers and a sustainable business for the future.

The restructuring that has been undertaken will enable the Group to deliver double digit earnings this year. In addition, during 2015 Monarch stands to benefit from the sharp fall in jet fuel prices, having un-hedged its position in September last year. This compares favourably to 2014, where the Group expects to incur losses (LBITDA) of around £44 million and pre-exceptional costs of £125 million (or losses of £169 million post exceptional costs).

The restructure will enable Monarch to deliver a more sustainable performance over the coming years.

Metric	2015 (expected)	2014 (actual)	% Change
Capacity	7,261,416	8,729,791	-17%
ASK (in million km)*	15,613	19,454	-20%
RASK (revenue in pence)	4.00	3.88	3%
CASK (costs in pence)**	3.96	4.37	-9%

*ASK = available seat kilometres

**Average sector length for Monarch is over 2000km, compared to around 1100km for other European carriers with a low-cost base

In the past three months the business has been trading well, with strong mobile bookings and other direct sales in the key period since Christmas. The airline is on track to reduce winter losses by around £20 million.

April 2018 will see the delivery of the first of 30 new Boeing 737 MAX8 aircraft to enter the fleet. The airline confirmed this order in autumn 2014 to fully replace its current Airbus fleet by 2020. Each of the 30 new Boeing 737 MAX8 aircraft will deliver savings of up to 15% in fuel costs annually.

Chief Executive, Andrew Swaffield, said:

"We are delivering a proper restructuring and turnaround of Monarch as we said we would. There is much to be done, but we now have a business with much lower costs, a solid platform for developing sustainable profitability and a clear strategic focus.

"The restructuring process was painful for everyone and I would like to say a big thank you to all of our colleagues who have remained focused on delivering great service to our customers throughout this period. Our aim is for all our people to share in the future success of the business. We must also acknowledge the support from our many industry partners, without whom the restructure would not have been possible.

Marc Meyohas, partner of Greybull Capital, said:

"The refocused management team, led by Andrew Swaffield and now joined by Barry Nightingale, are doing a great job in steering Monarch through the restructuring process. They have laid the groundwork for Monarch to re-establish itself as a profitable business and a leading leisure travel brand."