THE collapse of Monarch Airlines appears to have come out of the blue, but the straws were in the wind for at least two years. 

In 2014 Greybull Capital bought a 90 per cent share in the company from former owners the Swiss-Italian Mantegazza family, with a view to turning it round to make a profit. 

As reported in the Independent in 2016, Greybull injected £25 million into the airline in return for the 90 per cent share in expectation of turning a loss of £90m to a profit of £40m.

By October 2015, with Monarch showing a profit of of £40m, Greybull then started moves to sell it off to make more money. The Sunday Times commented at the time that Greybull expected to make a substantial profit from the sale.

The turnaround engineered by Greybull ditched Monarch’s long-haul charter operations and instead went for the budget airline market, focusing on regional European and Mediterranean leisure routes. 

Despite showing a profit of some £40m for the year ending 2015, Greybull began exploring options to sell the airline and has engaged in talks with Norwegian, Easyjet and Wizz Air. 

It also held talks with AG International Airlines Group in order to sell off the short-haul business and Greybull had plans to retain Monarch as a long-haul leisure specialist.

All of this came to nothing and the airline, Britain’s fifth-largest carrier, went bust at the beginning of October. 

As shown by the number of passengers on the books — with over 110,000 passengers stranded by the collapse and some 300,000 having their travel arrangements wrecked — the customer base of the airline looked healthy. 

However the company has explained the collapse by claiming that the carrier’s traffic has been hit hard by terrorist attacks in Tunisia and Egypt and the refugee crisis has has hampered its Turkish and Cypriot operations. 

It will be noted in passing that these things don’t seem to have affected its competitors. The final blow seems to have been the cost of aviation fuel which has risen against a weak pound.

Greybull now looks to make a substantial loss on the airline rather than the profit that had been predicted when it made the first moves to sell in 2015.

The 2,000 employees of the airline, the majority of whom are represented by Unite, are now in the process of taking it to an employment tribunal over a failure to consult on the redundancies. 

This will add further pressure on the company which seems to have imagined that fine words and sympathy would have sufficed for its staff.

Coming hard on the heels of Ryanair cancelling hundreds of flights due to having sent a substantial number of its pilots on holiday, the collapse of Monarch has prompted government spokesmen to claim that there is no crisis in the industry. Those stranded and those whose travel plans have been trashed may beg to differ. 

Earlier in the year with it becoming apparent to management that the airline was in trouble, the company had approached the government for a bridging loan to cover until next summer’s holiday season. 

Predictably with the Tories’ ideological commitment to “the market” this was refused. Those whom Monarch had been in talks with over a sale of the business will now be circling the corpse to see which bits they can pick up for a song.

As shown in the steel industry there is a wider point here. In 2015-16 when that industry was under severe threat, Greybull Capital was the private equity firm that bought the long products division at Scunthorpe from Tata for a nominal £1. 

From making substantial losses while part of Tata, in a matter of months Greybull was claiming that the works were in profit. 

On June 1 2016 Marc Meyohas, one of the partners at Greybull, was able to claim that “the plant has been profitable for months and is expected to be so for the rest of the year” (Scunthorpe Telegraph).

At the time of the sale Greybull was lauded by the media as the saviour of Monarch, with the BBC saying that in 2014 it rescued the company. 

The airline returned to profitability the following year, but by 2017 it was in the hands of the receiver with thousands of customers having their travel plans disrupted and 2,000 workers sacked.

Capitalism is an unstable system, as is demonstrated by the economic history of the last two centuries. Ownership by investment companies like Greybull makes this even more so since they have no interest in their acquisitions beyond whether or not they can make money out of them.  

Greybull’s track record is not impressive. In 2011 it acquired electrical retailer Comet. By 2014 it was insolvent. The same goes for Riley’s sports bars, bought in 2012, insolvent by 2014. Arc Engineering acquired in 2013, flogged off in 2017. Morrisons local convenience stores, acquired 2015, declared insolvent 2016, and of course Monarch acquired 2014, insolvent 2017.

The length of time that these acquisitions were with Greybull sits uneasily with the company’s self-description as medium to long-term investors in companies. More like a quick in, grab what you can and get out. 

For many, employment in the airline industry is seen as glamorous. At a time when many thousands of workers find themselves in precarious employment it will have come as something of a shock to see that job insecurity has reached into this sector. 

With continuing staffing problems at Ryanair there could well be further job losses and passenger disruption to come courtesy of an industry that puts profit well ahead of the provision of what is often a vital service. 

All those who work for an employer that is owned by Greybull will want to keep an eye on what is happening and be particularly concerned when moves start to sell the company off. 

This is a warning to workers in all other industries, in particular when it comes to nationally important enterprises such as the steel industry.