Monarch owner accepts 'moral obligation' over repatriation costs
The owner of the collapsed Monarch airline has said it has a “moral obligation” to help meet the costs of flying holidaymakers back to Britain after taxpayers footed the £60m bill.
In a letter to the chairman of the Commons transport select committee, the private equity firm Greybull Capital indicated that profits recovered from the failed firm could be shared with the government. It said in a statement that this would mean “helping to defray the costs incurred by the Department for Transport in repatriating Monarch customers”.
The collapse of Monarch: inside the doomed airline in its last days
Read moreThe announcement comes after the transport secretary, Chris Grayling, argued that Greybull should pay if it profited from the firm going into administration, but conceded that the government had no power to compel it to do so.
A Greybull spokesman said: “We concur wholeheartedly with the secretary of state’s recent statement that any stakeholder who finds themselves in-pocket at the end of the administration process would be under a moral obligation to contribute to other stakeholders.
“We also agree with the secretary of state that it is premature to prejudge the outcome of the administration.”
The Civil Aviation Authority (CAA) put on 567 flights which brought nearly 84,000 passengers back to the UK after the airline went into administration on 2 October. It was the UK’s biggest peacetime repatriation of stranded air travellers. The government has said previously it hoped to recoup part of the cost from credit card companies and tour operators whose customers were booked on Monarch flights.
Greybull’s handling of the company’s finances has come under intense scrutiny in the month since the airline went into administration. Monarch’s staff lost thousands of pounds in pension cuts when the private equity firm took over the company in 2014, and 750,000 passengers had forward bookings when the airline collapsed.
Administrators have yet to reveal how much money will be returned to creditors, including the pension protection fund, but MPs have raised concerns that Greybull could profit as a secured creditor while the taxpayer loses out.
AnalysisEverything you need to know about the collapse of Monarch Airlines
Read moreIn the letter to Lilian Greenwood, the chair of the transport select committee, the firm said that it had not taken out dividends, loan repayments or interest since its first investment in Monarch in October 2014. “Bar small advisory fees, all the money involved has only ever flowed one way – into the Monarch group.”
Greybull also said it had a long-standing practice of profit-sharing with other stakeholders, such as a commitment to split proceeds with the employees of British Steel. Thousands of steelworkers were granted a 5% stake in the company after the Scunthorpe steelworks, one of only two left in Britain, returned to profit in June.
A spokesman for the company added that Greybull had acted “responsibly and been a highly supportive shareholder” of the airline since 2014, and that it was “deeply sorry and saddened” about its failure.
Grayling told the transport select committee this month that he hoped “if any of the creditors end up with money in pocket that they might indeed consider” helping with the repatriation costs.
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Read moreHe said: “I would hope in a world where social responsibility is important to corporate reputation, that those involved – if indeed they recover monies in the way that has been suggested – might feel a moral obligation to contribute. I’m sure we will always look to try and encourage social responsibility.”
As Monarch’s main secured creditor, Greybull, which is run by Richard Perlhagen and brothers Marc and Nathaniel Meyohas, has first call on any cash collected from asset sales by the administrator KPMG, which is expected to recoup millions from selling the airline’s landing slots.
Source: https://www.theguardian.com/business/2017/oct/29/monarch-owner-accepts-moral-obligation-to-cover-cost-of-repatriation
In a letter to the chairman of the Commons transport select committee, the private equity firm Greybull Capital indicated that profits recovered from the failed firm could be shared with the government. It said in a statement that this would mean “helping to defray the costs incurred by the Department for Transport in repatriating Monarch customers”.
The collapse of Monarch: inside the doomed airline in its last days
Read moreThe announcement comes after the transport secretary, Chris Grayling, argued that Greybull should pay if it profited from the firm going into administration, but conceded that the government had no power to compel it to do so.
A Greybull spokesman said: “We concur wholeheartedly with the secretary of state’s recent statement that any stakeholder who finds themselves in-pocket at the end of the administration process would be under a moral obligation to contribute to other stakeholders.
“We also agree with the secretary of state that it is premature to prejudge the outcome of the administration.”
The Civil Aviation Authority (CAA) put on 567 flights which brought nearly 84,000 passengers back to the UK after the airline went into administration on 2 October. It was the UK’s biggest peacetime repatriation of stranded air travellers. The government has said previously it hoped to recoup part of the cost from credit card companies and tour operators whose customers were booked on Monarch flights.
Greybull’s handling of the company’s finances has come under intense scrutiny in the month since the airline went into administration. Monarch’s staff lost thousands of pounds in pension cuts when the private equity firm took over the company in 2014, and 750,000 passengers had forward bookings when the airline collapsed.
Administrators have yet to reveal how much money will be returned to creditors, including the pension protection fund, but MPs have raised concerns that Greybull could profit as a secured creditor while the taxpayer loses out.
AnalysisEverything you need to know about the collapse of Monarch Airlines
Read moreIn the letter to Lilian Greenwood, the chair of the transport select committee, the firm said that it had not taken out dividends, loan repayments or interest since its first investment in Monarch in October 2014. “Bar small advisory fees, all the money involved has only ever flowed one way – into the Monarch group.”
Greybull also said it had a long-standing practice of profit-sharing with other stakeholders, such as a commitment to split proceeds with the employees of British Steel. Thousands of steelworkers were granted a 5% stake in the company after the Scunthorpe steelworks, one of only two left in Britain, returned to profit in June.
A spokesman for the company added that Greybull had acted “responsibly and been a highly supportive shareholder” of the airline since 2014, and that it was “deeply sorry and saddened” about its failure.
Grayling told the transport select committee this month that he hoped “if any of the creditors end up with money in pocket that they might indeed consider” helping with the repatriation costs.
Guardian Today: the headlines, the analysis, the debate - sent direct to you
Read moreHe said: “I would hope in a world where social responsibility is important to corporate reputation, that those involved – if indeed they recover monies in the way that has been suggested – might feel a moral obligation to contribute. I’m sure we will always look to try and encourage social responsibility.”
As Monarch’s main secured creditor, Greybull, which is run by Richard Perlhagen and brothers Marc and Nathaniel Meyohas, has first call on any cash collected from asset sales by the administrator KPMG, which is expected to recoup millions from selling the airline’s landing slots.
Source: https://www.theguardian.com/business/2017/oct/29/monarch-owner-accepts-moral-obligation-to-cover-cost-of-repatriation