WEBVTT 00:00:00.000 --> 00:00:02.899 Welcome back to the Deep Dive. Today, we are 00:00:02.899 --> 00:00:04.799 opening a file that I think is going to trigger 00:00:04.799 --> 00:00:07.879 a very, very specific kind of nostalgia for a 00:00:07.879 --> 00:00:10.919 lot of people. It's a mix of fond memories, you 00:00:10.919 --> 00:00:13.359 know, that smell of sun cream, the rush of heat 00:00:13.359 --> 00:00:15.640 when the cabin doors open, but also a really 00:00:15.640 --> 00:00:18.320 sharp, almost painful reminder of how quickly 00:00:18.320 --> 00:00:22.269 these huge business empires can just... It's 00:00:22.269 --> 00:00:24.589 true. We were talking about the rise, the glory 00:00:24.589 --> 00:00:28.050 days, and the absolute catastrophic implosion 00:00:28.050 --> 00:00:31.269 of Monarch Airlines. It is a story that just 00:00:31.269 --> 00:00:33.409 has everything, doesn't it? It's got genuine 00:00:33.409 --> 00:00:35.789 business lessons. It's got incredible technological 00:00:35.789 --> 00:00:38.289 breakthroughs. And then as we get towards the 00:00:38.289 --> 00:00:40.450 end, it just descends into this sort of chaos 00:00:40.450 --> 00:00:44.310 of reality TV and geopolitical nightmares. It 00:00:44.310 --> 00:00:46.350 really does. It really marks the definitive end 00:00:46.350 --> 00:00:48.649 of an era in British travel, I think. And we 00:00:48.649 --> 00:00:50.829 aren't just talking about, you know, a shop. 00:00:50.990 --> 00:00:52.810 closing down on the high street here, we really 00:00:52.810 --> 00:00:54.350 need to set the scale for everyone listening 00:00:54.350 --> 00:00:56.890 right from the very start. When Monarch went 00:00:56.890 --> 00:00:59.810 under in October 2017, this was not a small ripple 00:00:59.810 --> 00:01:02.990 in the pond. No, it was a tsunami. At that specific 00:01:02.990 --> 00:01:05.230 moment in time, it was the largest airline failure 00:01:05.230 --> 00:01:08.329 in UK history. The numbers are actually, they're 00:01:08.329 --> 00:01:10.069 difficult to visualize until you really break 00:01:10.069 --> 00:01:12.769 them down. Right. You get 110 ,000 people. I 00:01:12.769 --> 00:01:16.370 mean, think about that. 110 ,000 families, couples, 00:01:16.670 --> 00:01:20.819 retirees, just stranded abroad. instantly it's 00:01:20.819 --> 00:01:24.319 gone one minute you're sipping a sangria in minorca 00:01:24.319 --> 00:01:26.299 thinking about your flight home tomorrow and 00:01:26.299 --> 00:01:28.359 the next minute that flight literally does not 00:01:28.359 --> 00:01:30.760 exist the plane just isn't coming And that's 00:01:30.760 --> 00:01:32.560 just the people who were already out there. That's 00:01:32.560 --> 00:01:34.459 the immediate, you know, the crisis on the ground. 00:01:34.599 --> 00:01:37.000 Right. But the bigger number, the one that really 00:01:37.000 --> 00:01:40.680 hurt the economy, and I think public trust, was 00:01:40.680 --> 00:01:44.579 the 300 ,000 future bookings. They just vanished 00:01:44.579 --> 00:01:48.000 into thin air overnight. That's 300 ,000 holidays 00:01:48.000 --> 00:01:51.040 canceled, wedding anniversaries ruined, honeymoons 00:01:51.040 --> 00:01:53.659 that just... didn't happen. It was a mass extinction 00:01:53.659 --> 00:01:56.379 event for holiday clans. So our mission today, 00:01:56.459 --> 00:01:58.599 looking at these historical records we've got, 00:01:58.680 --> 00:02:00.700 the accident reports, the financial timelines, 00:02:00.939 --> 00:02:04.859 it's to answer one really big question. How? 00:02:05.459 --> 00:02:08.780 How does a company that was basically the furniture 00:02:08.780 --> 00:02:11.860 of the holiday industry for 50 years, a company 00:02:11.860 --> 00:02:14.319 that so successfully democratized travel for 00:02:14.319 --> 00:02:16.879 the working class, how does it end up succumbing 00:02:16.879 --> 00:02:20.550 to this perfect storm? It is the ultimate question, 00:02:20.650 --> 00:02:22.430 isn't it? Because on the surface, if you just 00:02:22.430 --> 00:02:24.430 look at the headlines from 2017, it just looks 00:02:24.430 --> 00:02:26.629 like a string of bad luck. You know, terror attacks, 00:02:26.849 --> 00:02:29.310 Brexit, fuel prices. Right. But when you actually 00:02:29.310 --> 00:02:32.250 dig into the sources, you see 50 years of very 00:02:32.250 --> 00:02:34.030 specific decisions that left them vulnerable 00:02:34.030 --> 00:02:36.090 when that storm finally hit. Yeah. We're going 00:02:36.090 --> 00:02:38.210 to look at planes nicknamed Whispering Giants. 00:02:38.409 --> 00:02:40.550 We're going to look at a secret government operation 00:02:40.550 --> 00:02:42.889 to bring people home. And yes, we are absolutely 00:02:42.889 --> 00:02:44.449 going to talk about the time they tried to save 00:02:44.449 --> 00:02:46.810 the airline using C -list celebrities serving 00:02:46.810 --> 00:02:49.590 drinks at 30 ,000 feet. I cannot wait to get 00:02:49.590 --> 00:02:51.930 to the celebrity part. It feels like a fever 00:02:51.930 --> 00:02:53.669 dream. But let's not get ahead of ourselves. 00:02:53.789 --> 00:02:56.050 We need to rewind. We need to go way back to 00:02:56.050 --> 00:02:58.449 a world before the Internet, before budget airlines, 00:02:58.710 --> 00:03:00.550 before security lines were three hours long. 00:03:01.090 --> 00:03:04.689 Let's go to June 5th, 1967. The Summer of Love. 00:03:05.509 --> 00:03:08.090 But in the aviation world, it was the summer 00:03:08.090 --> 00:03:10.409 of opportunity. And this is where we meet two 00:03:10.409 --> 00:03:13.210 guys, Bill Hodgson and Don Peacock. The founders. 00:03:13.430 --> 00:03:15.770 Yeah. Who were these guys? Were they just sort 00:03:15.770 --> 00:03:18.330 of wealthy eccentrics who wanted to fly planes? 00:03:18.469 --> 00:03:20.849 Not at all. Not at all. These guys weren't fresh 00:03:20.849 --> 00:03:24.050 faced dreamers. They were real aviation veterans. 00:03:24.469 --> 00:03:27.050 They'd previously been directors at another airline 00:03:27.050 --> 00:03:29.550 called British Eagle. Right. But they looked 00:03:29.550 --> 00:03:32.169 at the market in 67 and they saw a massive gap. 00:03:32.289 --> 00:03:34.229 You have to remember, in the mid 60s, flying 00:03:34.229 --> 00:03:37.259 was still. Well, it was posh, wasn't it? It was 00:03:37.259 --> 00:03:39.199 for the jet set. Right. People dressed up to 00:03:39.199 --> 00:03:41.979 fly. It was expensive. It was exclusive. You 00:03:41.979 --> 00:03:44.800 didn't just hop on a plane. Precisely. Hodgson 00:03:44.800 --> 00:03:46.919 and Peacock, they had a completely different 00:03:46.919 --> 00:03:49.699 vision. They wanted to build an airline for the 00:03:49.699 --> 00:03:52.460 average family. They weren't chasing the businessmen 00:03:52.460 --> 00:03:54.759 in the suit flying to New York. They were chasing 00:03:54.759 --> 00:03:56.960 the factory worker from Luton who wanted two 00:03:56.960 --> 00:03:59.800 weeks of guaranteed sun in Spain. They saw the 00:03:59.800 --> 00:04:02.599 potential for mass tourism before it had really, 00:04:02.599 --> 00:04:05.000 truly exploded. So they basically wanted to be 00:04:05.000 --> 00:04:07.680 the bus service to the coast of El Sol. In the 00:04:07.680 --> 00:04:10.199 best possible way, yes. But here's the thing 00:04:10.199 --> 00:04:12.039 about airlines, and it's as true today as it 00:04:12.039 --> 00:04:15.870 was in 1967. They are incredibly eye -wateringly 00:04:15.870 --> 00:04:19.050 expensive to start. You need planes, you need 00:04:19.050 --> 00:04:21.709 fuel, you need licenses. Two guys with a great 00:04:21.709 --> 00:04:24.149 vision that doesn't pay for a fleet. They needed 00:04:24.149 --> 00:04:27.029 muscle, financial muscle. And this brings us 00:04:27.029 --> 00:04:28.949 to a name that keeps popping up again and again 00:04:28.949 --> 00:04:31.959 in the documents. The Montegasa family. The Swiss 00:04:31.959 --> 00:04:35.000 powerhouses. This is absolutely crucial to understanding 00:04:35.000 --> 00:04:37.180 Monarch's DNA right from the very beginning. 00:04:37.339 --> 00:04:40.939 The Montegasa family owned Cosmos Tours. Cosmos. 00:04:41.000 --> 00:04:42.860 Yeah, I remember the commercials. So connect 00:04:42.860 --> 00:04:45.339 the dots for me. Why does a Swiss tour operator 00:04:45.339 --> 00:04:47.899 need its own British airline? It's vertical integration. 00:04:48.220 --> 00:04:51.019 It's a business buzzword now. But back then, 00:04:51.060 --> 00:04:53.879 it was just incredibly smart strategy. Think 00:04:53.879 --> 00:04:57.319 about it. Cosmos sells the package, the hotel, 00:04:57.519 --> 00:05:00.370 the transfer. the holiday rep right but they 00:05:00.370 --> 00:05:03.050 were relying on other airlines to get the customers 00:05:03.050 --> 00:05:05.089 there that means they were totally at the mercy 00:05:05.089 --> 00:05:08.649 of other companies prices their schedules their 00:05:08.649 --> 00:05:12.399 reliability if you start your own airline You 00:05:12.399 --> 00:05:15.579 control the entire chain. You control the cost, 00:05:15.720 --> 00:05:18.339 the schedule, the experience from start to finish. 00:05:18.540 --> 00:05:20.699 You aren't just renting the bus anymore. You 00:05:20.699 --> 00:05:23.779 own the bus. You own the bus. Exactly. The airline 00:05:23.779 --> 00:05:26.379 was operated as a subsidiary of a company called 00:05:26.379 --> 00:05:29.279 Globus Getaway Holdings, which was the Montegaza's 00:05:29.279 --> 00:05:32.459 main holding company. And this gave Monarch a 00:05:32.459 --> 00:05:34.680 massive, massive advantage right out of the gate. 00:05:34.819 --> 00:05:36.519 Because they didn't have to find customers. They 00:05:36.519 --> 00:05:38.500 didn't have to spend a single penny on advertising 00:05:38.500 --> 00:05:41.139 to find customers. Cosmos just handed them the 00:05:41.139 --> 00:05:43.120 passengers. It's an incredible safety net for 00:05:43.120 --> 00:05:44.959 a startup. That is a nice way to start a business. 00:05:45.120 --> 00:05:47.240 So they've got the money. They've got the passengers. 00:05:47.600 --> 00:05:49.899 When do they actually get a plane in the air? 00:05:50.139 --> 00:05:53.579 Yeah. April 5th, 1968. That's when commercial 00:05:53.579 --> 00:05:56.279 operations launch with a flight from Luton to 00:05:56.279 --> 00:05:59.399 Madrid. Luton Airport. I feel like we can't tell 00:05:59.399 --> 00:06:01.360 this story without acknowledging Luton. It really 00:06:01.360 --> 00:06:03.220 is the spiritual home of the British charter 00:06:03.220 --> 00:06:05.519 flight, isn't it? It absolutely is. And back 00:06:05.519 --> 00:06:08.240 in 68, it was the Wild West compared to today. 00:06:08.540 --> 00:06:11.810 But Monarch wasn't flying jets yet. Not in 68. 00:06:12.129 --> 00:06:14.490 Their first workhorse was a plane called the 00:06:14.490 --> 00:06:18.569 Bristol 175 Britannia 300. The Britannia. I'm 00:06:18.569 --> 00:06:20.910 looking at a picture of this in the notes. It's 00:06:20.910 --> 00:06:22.790 not a jet, is it? It's got propellers. It's a 00:06:22.790 --> 00:06:26.009 turboprop, a big, lovely four -engine beast. 00:06:26.209 --> 00:06:28.290 They actually bought their first two from Caledonian 00:06:28.290 --> 00:06:31.389 Airways. And for the passengers, this was, well, 00:06:31.449 --> 00:06:34.050 it was an experience. It wasn't the smooth, silent 00:06:34.050 --> 00:06:37.490 whoosh of a modern jet. It was loud, it vibrated, 00:06:37.569 --> 00:06:39.189 and it definitely took a bit longer to get to 00:06:39.189 --> 00:06:41.149 Spain. But it was a reliable old thing. And I'm 00:06:41.149 --> 00:06:43.069 guessing cheaper to run than the early jets? 00:06:43.910 --> 00:06:45.430 Significantly cheaper. And that was the whole 00:06:45.430 --> 00:06:46.949 point, because they were trying to keep the ticket 00:06:46.949 --> 00:06:49.569 prices right down for that average family. And 00:06:49.569 --> 00:06:51.970 it worked. I mean, the growth was just explosive. 00:06:52.410 --> 00:06:55.230 By 1969, which was only their second year of 00:06:55.230 --> 00:06:58.670 operation, they hit 250 ,000 passengers. That 00:06:58.670 --> 00:07:01.629 seems incredibly fast for a startup airline in 00:07:01.629 --> 00:07:04.069 the 60s. It was rampant. They actually had to 00:07:04.069 --> 00:07:06.529 go out and buy more Britannias from the administrators 00:07:06.529 --> 00:07:09.209 of their old employer, British Eagle, which had 00:07:09.209 --> 00:07:11.250 gone bust by then. Oh, there's a bit of delicious 00:07:11.250 --> 00:07:14.050 irony there. Buying the bones of your old company 00:07:14.050 --> 00:07:16.470 to build your new one. It's a recurring theme 00:07:16.470 --> 00:07:19.269 in aviation, isn't it? It's a cannibalistic industry. 00:07:19.310 --> 00:07:23.370 But as we move into the 1970s, that whole propeller 00:07:23.370 --> 00:07:26.930 era is starting to look a bit, well, a bit vintage. 00:07:27.149 --> 00:07:29.449 Yeah. The world is speeding up. People don't 00:07:29.449 --> 00:07:31.810 want to spend four hours vibrating on a turboprop 00:07:31.810 --> 00:07:33.910 if they can get there in two hours on a sleek 00:07:33.910 --> 00:07:36.810 new jet. So enter the jet age. This is where 00:07:36.810 --> 00:07:38.910 the company really starts to look like the monarch. 00:07:39.550 --> 00:07:41.610 that people of a certain age will remember. 1971. 00:07:41.769 --> 00:07:44.870 This is a huge milestone. Monarch acquires three 00:07:44.870 --> 00:07:49.170 Boeing 720Bs. Now, for the non -aviation geeks 00:07:49.170 --> 00:07:51.350 listening, and I definitely include myself in 00:07:51.350 --> 00:07:55.009 that. What exactly is a 720B? Is that like a 00:07:55.009 --> 00:07:57.629 707? It's a variant of the 707, yeah. A slightly 00:07:57.629 --> 00:08:00.230 shorter, lighter version, but it's a proper four 00:08:00.230 --> 00:08:04.670 -engine jetliner. Sleek, fast, shiny. And this 00:08:04.670 --> 00:08:06.529 is where we get one of those great little historical 00:08:06.529 --> 00:08:08.569 nuggets that you find in the sources. Get one. 00:08:09.050 --> 00:08:12.170 Co -founder Bob Hodgson absolutely loved these 00:08:12.170 --> 00:08:14.250 planes. He was so proud of them, he gave them 00:08:14.250 --> 00:08:16.750 a nickname. He called them the Whispering Giants. 00:08:16.949 --> 00:08:19.709 Whispering Giants. That sounds like some good 00:08:19.709 --> 00:08:21.569 old marketing speak to me. Were they actually 00:08:21.569 --> 00:08:24.129 quiet? Well, everything's relative, isn't it? 00:08:24.149 --> 00:08:26.329 Compared to the rattling roar of the piston engines 00:08:26.329 --> 00:08:28.689 and the deep drone of the turboprops they were 00:08:28.689 --> 00:08:31.189 replacing, yes, they absolutely whispered. I 00:08:31.189 --> 00:08:33.750 suppose so. They offered a much smoother, faster, 00:08:33.850 --> 00:08:36.230 higher ride. It was the moment Monarch stopped 00:08:36.230 --> 00:08:38.570 being a sort of budget alternative and started 00:08:38.570 --> 00:08:41.649 looking like a proper modern airline. By 1976, 00:08:42.029 --> 00:08:44.850 they retired the very last Britannia, sold it 00:08:44.850 --> 00:08:47.429 to a Greek cargo outfit, and went all jet. So 00:08:47.429 --> 00:08:50.610 they are flying high, literally. New jets. Growing 00:08:50.610 --> 00:08:53.610 passenger numbers. But the 1970s wasn't exactly 00:08:53.610 --> 00:08:55.769 a smooth ride for the world economy, was it? 00:08:55.789 --> 00:08:58.049 No. And this is where the story gets really, 00:08:58.110 --> 00:09:00.009 really interesting from a business resilience 00:09:00.009 --> 00:09:03.830 perspective. We have to talk about the 1973 -74 00:09:03.830 --> 00:09:06.470 crisis. The oil crisis. The energy crisis was 00:09:06.470 --> 00:09:09.250 absolutely brutal for aviation. The price of 00:09:09.250 --> 00:09:12.169 oil didn't just go up a bit, it quadrupled. Now 00:09:12.169 --> 00:09:15.049 imagine you are an airline. Fuel is your single 00:09:15.049 --> 00:09:17.730 biggest cost. All of a sudden, your entire business 00:09:17.730 --> 00:09:21.000 model is on fire. And at the same time, people 00:09:21.000 --> 00:09:22.700 have less money to spend on holidays because 00:09:22.700 --> 00:09:24.580 inflation is going completely crazy. It's the 00:09:24.580 --> 00:09:26.519 perfect double whammy. Your costs go through 00:09:26.519 --> 00:09:28.480 the roof and your demand goes through the floor. 00:09:28.580 --> 00:09:30.299 And casualties were happening. Have you ever 00:09:30.299 --> 00:09:32.220 heard of Courtline? The name rings a bell. They 00:09:32.220 --> 00:09:34.100 were big, right? Yeah. With the brightly colored 00:09:34.100 --> 00:09:35.899 planes. They were huge. They were the biggest 00:09:35.899 --> 00:09:38.840 rival in the package holiday sector. They owned 00:09:38.840 --> 00:09:42.519 Clarkson's Tours. They had these bright, multicolored 00:09:42.519 --> 00:09:44.820 planes, pink, orange, turquoise. They were the 00:09:44.820 --> 00:09:48.159 absolute market leaders. And in August 1974, 00:09:48.549 --> 00:09:51.009 they collapsed. Went into receivership. It was 00:09:51.009 --> 00:09:53.570 a national scandal. So the big dog in the industry 00:09:53.570 --> 00:09:57.769 dies. What does Monarch do? Do they panic? Monarch 00:09:57.769 --> 00:09:59.929 feasts. This is the difference between being 00:09:59.929 --> 00:10:02.269 over leveraged and having that conservative Swiss 00:10:02.269 --> 00:10:04.610 backing we talked about earlier. When Courtline 00:10:04.610 --> 00:10:07.549 failed, Monarch didn't panic. They swooped in. 00:10:07.669 --> 00:10:10.350 Wow. They hired the pilots and the cabin crew 00:10:10.350 --> 00:10:13.149 who had lost their jobs overnight and they acquired 00:10:13.149 --> 00:10:16.409 the aircraft, specifically the BAC -111 -500s 00:10:16.409 --> 00:10:20.299 from the liquidator. That is Ruthless, but incredibly 00:10:20.299 --> 00:10:22.720 effective. It absolutely solidified their position. 00:10:22.919 --> 00:10:25.279 While the market leader was imploding in a very 00:10:25.279 --> 00:10:28.299 public way, Monarch was quietly shopping for 00:10:28.299 --> 00:10:30.580 Bardens in the wreckage. It proved that their 00:10:30.580 --> 00:10:32.779 vertical integration model with the Mantegazas 00:10:32.779 --> 00:10:35.360 was just incredibly robust. They had a financial 00:10:35.360 --> 00:10:38.039 safety net that Courtline simply didn't. So they 00:10:38.039 --> 00:10:40.039 survived the 70s. In fact, they come out of it 00:10:40.039 --> 00:10:43.899 stronger. Now we hit the 1980s. Big hair, shoulder 00:10:43.899 --> 00:10:46.720 pads, and apparently some big, big risks for 00:10:46.720 --> 00:10:49.529 Monarch. The 80s were the decade where monarchs 00:10:49.529 --> 00:10:51.490 stopped just playing it safe and reacting. They 00:10:51.490 --> 00:10:54.409 started to innovate. In 1980, they modernized 00:10:54.409 --> 00:10:57.929 with brand new Boeing 737 -200s. But there's 00:10:57.929 --> 00:10:59.789 a detail in the records here that I just love, 00:10:59.870 --> 00:11:02.669 and it's a bit of a geopolitical oddity. They 00:11:02.669 --> 00:11:04.629 weren't just flying out of Luton anymore. They 00:11:04.629 --> 00:11:07.850 opened a base in Berlin. Berlin. Hang on. This 00:11:07.850 --> 00:11:10.330 is the 1980s. The wall is still very much up. 00:11:10.429 --> 00:11:13.750 We're talking West Berlin. West Berlin. Tegel 00:11:13.750 --> 00:11:16.309 Airport. They secured a contract with a German 00:11:16.309 --> 00:11:20.009 tour operator called Flug Union Berlin. Now you 00:11:20.009 --> 00:11:22.159 have to think about the geography here. West 00:11:22.159 --> 00:11:25.240 Berlin was this island of democracy completely 00:11:25.240 --> 00:11:27.720 surrounded by communist East Germany. Right. 00:11:27.820 --> 00:11:30.100 Deep inside the Soviet sector. And because of 00:11:30.100 --> 00:11:32.320 the post -war treaties, only airlines from the 00:11:32.320 --> 00:11:35.220 Allied powers, the UK, the USA and France, were 00:11:35.220 --> 00:11:37.679 allowed to fly into West Berlin. Lufthansa, the 00:11:37.679 --> 00:11:39.820 German national carrier, was actually banned 00:11:39.820 --> 00:11:41.840 from flying to Berlin. Oh, that is fascinating. 00:11:41.899 --> 00:11:44.519 So because it was technically still occupied 00:11:44.519 --> 00:11:47.100 territory, German airlines were locked out of 00:11:47.100 --> 00:11:51.309 their own capital city. Precisely. British, American 00:11:51.309 --> 00:11:54.629 and French airlines had a total monopoly on the 00:11:54.629 --> 00:11:57.230 Berlin market. And Monarch tapped right into 00:11:57.230 --> 00:11:59.899 that. They were flying German tourists from West 00:11:59.899 --> 00:12:02.659 Berlin down to the Mediterranean. It just shows 00:12:02.659 --> 00:12:05.179 they were always looking for these clever, opportunistic 00:12:05.179 --> 00:12:08.519 revenue streams outside of just the UK summer 00:12:08.519 --> 00:12:11.419 holiday maker. Very smart. But you mentioned 00:12:11.419 --> 00:12:14.000 a big risk in the intro to this section. Yeah. 00:12:14.059 --> 00:12:17.200 It wasn't the Berlin base. No. The Boeing 757, 00:12:17.299 --> 00:12:20.879 this is 1981, Monarch became the first charter 00:12:20.879 --> 00:12:24.600 airline to order the Boeing 757 -200. Why is 00:12:24.600 --> 00:12:26.460 that considered such a big risk? It's just another 00:12:26.460 --> 00:12:28.259 plane, isn't it? isn't it? Oh, no. It was a brand 00:12:28.259 --> 00:12:29.919 new type of plane. This is the thing. Usually, 00:12:30.000 --> 00:12:32.379 charter airlines are the scavengers of the industry. 00:12:32.679 --> 00:12:35.059 They wait for British Airways or Lufthansa to 00:12:35.059 --> 00:12:37.340 use a plane for 15 years, then they buy it secondhand. 00:12:37.399 --> 00:12:39.480 It's much, much cheaper. Right. For a relatively 00:12:39.480 --> 00:12:41.919 small charter airline like Monarch to order brand 00:12:41.919 --> 00:12:44.960 new 757s directly from the factory in Seattle, 00:12:45.100 --> 00:12:47.200 that was a massive statement of intent. It was 00:12:47.200 --> 00:12:49.120 incredibly expensive. They were betting the farm 00:12:49.120 --> 00:12:51.950 on efficiency and new technology. And on capacity. 00:12:52.370 --> 00:12:56.009 The 757 was a complete game changer for the holiday 00:12:56.009 --> 00:12:58.830 industry. It was a single aisle plane, but it 00:12:58.830 --> 00:13:01.409 was long and powerful. It could carry over 200 00:13:01.409 --> 00:13:04.409 people and it had incredible performance. It 00:13:04.409 --> 00:13:06.610 became the absolute workhorse of the industry. 00:13:06.870 --> 00:13:09.610 If you went on holiday in the 90s or 2000s, you 00:13:09.610 --> 00:13:12.350 almost certainly flew on a 757. It was a good 00:13:12.350 --> 00:13:15.429 bet then. A fantastic bet. It combined the range 00:13:15.429 --> 00:13:18.090 to reach the Canaries or Greece easily with the 00:13:18.090 --> 00:13:20.309 economics of a smaller plane. It was perfect. 00:13:20.299 --> 00:13:22.000 Perfect. But the innovation wasn't just about 00:13:22.000 --> 00:13:24.259 the hardware, was it? The whole business model 00:13:24.259 --> 00:13:26.539 started to shift in the mid 80s as well. This 00:13:26.539 --> 00:13:29.600 is the Crown Service era. In 1985, the Civil 00:13:29.600 --> 00:13:32.679 Aviation Authority, the CAA, granted monarch 00:13:32.679 --> 00:13:35.340 licenses for scheduled services for the first 00:13:35.340 --> 00:13:37.299 time. OK, we need to pause and just unpack that 00:13:37.299 --> 00:13:39.059 distinction because it's absolutely vital for 00:13:39.059 --> 00:13:41.440 the rest of the story. Charter versus scheduled. 00:13:41.740 --> 00:13:43.779 What is the actual difference for the person 00:13:43.779 --> 00:13:47.049 sitting in seat 14A? Okay. A charter flight is 00:13:47.049 --> 00:13:49.850 basically a flight that's bought in bulk as part 00:13:49.850 --> 00:13:52.129 of a package. You go to a travel agent, you buy 00:13:52.129 --> 00:13:54.590 a week in Benidorm, and the flight is just the 00:13:54.590 --> 00:13:56.850 bus that takes you there. You don't really pick 00:13:56.850 --> 00:13:59.549 the airline. The tour operator, like Cosmos, 00:13:59.629 --> 00:14:02.049 does. And the plane goes where the tour operator 00:14:02.049 --> 00:14:04.389 tells it to. Exactly. And if the tour operator 00:14:04.389 --> 00:14:07.230 doesn't sell enough holidays for that week, the 00:14:07.230 --> 00:14:09.169 flight might be canceled or combined with another 00:14:09.169 --> 00:14:11.950 one. It's reactive. Right. A scheduled flight 00:14:11.950 --> 00:14:14.289 is like British Airways or Pan Am back then. 00:14:14.779 --> 00:14:16.860 You go to the airline's website or ticket desk 00:14:16.860 --> 00:14:19.440 and you buy a ticket from Luton to Malaga at 00:14:19.440 --> 00:14:22.700 a set time on a set day. The plane flies that 00:14:22.700 --> 00:14:24.399 route regardless of whether you have a hotel 00:14:24.399 --> 00:14:26.440 booked or not. It runs on a schedule. It's a 00:14:26.440 --> 00:14:28.500 commitment. So by launching scheduled services, 00:14:28.919 --> 00:14:31.059 Monarch was stepping into the big leagues. They 00:14:31.059 --> 00:14:33.720 were basically saying, we aren't just a holiday 00:14:33.720 --> 00:14:36.750 bus anymore. We are a real airline. That's it 00:14:36.750 --> 00:14:39.070 exactly. They launched Monarch Crown Service. 00:14:39.169 --> 00:14:42.210 They flew to Malaga, Menorca, Tenerife. They 00:14:42.210 --> 00:14:44.470 were trying to build a standalone brand. They 00:14:44.470 --> 00:14:47.330 wanted people to choose to fly with Monarch, 00:14:47.330 --> 00:14:49.730 not just choose to go on holiday with Cosmos. 00:14:49.730 --> 00:14:52.029 It was a huge step towards diversifying their 00:14:52.029 --> 00:14:54.809 business. And this confidence, this new technology, 00:14:55.029 --> 00:14:57.970 it led to some pretty serious aviation milestones. 00:14:58.730 --> 00:15:01.370 I'm seeing something here about ETA -PS. ETA 00:15:01.370 --> 00:15:04.649 -PS, yes. This is one of my favorite nerdy aviation 00:15:04.649 --> 00:15:07.830 topics. It stands for Extended Range Twin Engine 00:15:07.830 --> 00:15:10.509 Operational Performance Standards. Getchy. Rules 00:15:10.509 --> 00:15:13.330 right off the top. It's a mouthful. But the concept 00:15:13.330 --> 00:15:16.090 is revolutionary. For decades, if you wanted 00:15:16.090 --> 00:15:18.909 to fly across a huge body of water like the Atlantic, 00:15:19.149 --> 00:15:21.230 you needed more than two engines. You needed 00:15:21.230 --> 00:15:24.330 three or four. Think of the 747 or the DC -10. 00:15:24.529 --> 00:15:26.789 Because if one engine fails, you have backups. 00:15:27.320 --> 00:15:28.799 You're not going to fall out of the sky. Right. 00:15:28.879 --> 00:15:31.179 The logic was if you only have two engines and 00:15:31.179 --> 00:15:33.200 one fails over the middle of the ocean, you are 00:15:33.200 --> 00:15:36.320 in very big trouble. The regulations said a twin 00:15:36.320 --> 00:15:38.539 -engine plane had to stay within 60 minutes of 00:15:38.539 --> 00:15:41.059 a suitable airport at all times. Which makes 00:15:41.059 --> 00:15:44.080 crossing the Atlantic impossible. Exactly, because 00:15:44.080 --> 00:15:46.179 the ocean is much wider than that. You'd have 00:15:46.179 --> 00:15:48.440 to hug the coast of Greenland and Iceland, which 00:15:48.440 --> 00:15:51.379 takes forever and burns far too much fuel. It 00:15:51.379 --> 00:15:53.460 wasn't viable. So you just couldn't take a direct 00:15:53.460 --> 00:15:56.519 path. No. But engines got more and more reliable. 00:15:56.649 --> 00:15:59.289 In the 80s, Boeing and the regulators started 00:15:59.289 --> 00:16:01.570 testing the idea that these new jets like the 00:16:01.570 --> 00:16:04.870 757 were so reliable that you could trust them 00:16:04.870 --> 00:16:06.909 to fly further from an airport on just one engine 00:16:06.909 --> 00:16:10.830 if necessary. And in 1988, Monarch operated the 00:16:10.830 --> 00:16:14.330 first ETA -PS transatlantic operation by a British 00:16:14.330 --> 00:16:17.870 twin jet. They flew a 757 all the way across 00:16:17.870 --> 00:16:20.789 the pond. They flew from Luton to Orlando with 00:16:20.789 --> 00:16:23.830 a refueling stop in Gander, Canada. Luton to 00:16:23.830 --> 00:16:27.250 Orlando on a single aisle plane. That sounds 00:16:27.250 --> 00:16:29.470 intimate. A long day at the office? It was a 00:16:29.470 --> 00:16:31.750 long day, for sure. Six or seven hours in a narrow 00:16:31.750 --> 00:16:34.149 tube. But for the airline, it was revolutionary. 00:16:34.549 --> 00:16:36.830 It meant they could fly families directly to 00:16:36.830 --> 00:16:38.929 Disney World efficiently, without needing to 00:16:38.929 --> 00:16:42.149 fill a massive 400 -seat jumbo jet. It opened 00:16:42.149 --> 00:16:43.850 up the long -haul leisure market to the middle 00:16:43.850 --> 00:16:45.809 class in a way that hadn't been possible before. 00:16:46.090 --> 00:16:48.690 And the numbers reflected this success? Hugely. 00:16:49.000 --> 00:16:51.779 By 1988, thanks to all these moves, they were 00:16:51.779 --> 00:16:54.519 carrying over 2 million passengers a year. So 00:16:54.519 --> 00:16:56.360 they're flying high. They've got the scheduled 00:16:56.360 --> 00:16:59.000 flights, the shiny new planes, the transatlantic 00:16:59.000 --> 00:17:00.340 routes. They are absolutely the kings of the 00:17:00.340 --> 00:17:04.160 castle. But then the 1990s arrive. And with the 00:17:04.160 --> 00:17:06.140 90s comes a new color that would haunt them for 00:17:06.140 --> 00:17:09.759 the rest of their existence. Orange. Enter EasyJet. 00:17:09.859 --> 00:17:13.369 And, of course, Ryanair. The 1990s completely 00:17:13.369 --> 00:17:16.130 changed the fundamental physics of aviation in 00:17:16.130 --> 00:17:18.150 Europe. This was the disruption of the century 00:17:18.150 --> 00:17:19.789 for that industry, wasn't it? It really was. 00:17:19.910 --> 00:17:22.309 You had Stelios with EasyJet, Michael O 'Leary 00:17:22.309 --> 00:17:24.970 with Ryanair. They came in with a completely 00:17:24.970 --> 00:17:28.930 radically different model. No frills, no free 00:17:28.930 --> 00:17:32.630 meals, no assigned seats initially, just rock 00:17:32.630 --> 00:17:35.130 bottom, unbelievably low prices. And they were 00:17:35.130 --> 00:17:37.150 selling seat only. That was the key, right? That's 00:17:37.150 --> 00:17:39.250 the absolute key. People started realizing, wait 00:17:39.250 --> 00:17:41.579 a minute, the Internet exists now. to go to a 00:17:41.579 --> 00:17:44.400 travel agent on the high street and buy a package. 00:17:44.539 --> 00:17:47.460 I can book a $29 room flight to Nice on this 00:17:47.460 --> 00:17:50.079 new orange airline and I can go on another website 00:17:50.079 --> 00:17:53.099 and book my own hotel. And Monarch was sitting 00:17:53.099 --> 00:17:54.980 there with its crown service and its free hot 00:17:54.980 --> 00:17:58.059 meals looking, well, suddenly looking quite old 00:17:58.059 --> 00:18:00.609 fashioned and expensive. They were caught completely 00:18:00.609 --> 00:18:02.789 in the middle. They were too expensive to be 00:18:02.789 --> 00:18:05.250 a low -cost airline. But they weren't premium 00:18:05.250 --> 00:18:08.049 enough to be British Airways. They were the classic 00:18:08.049 --> 00:18:10.369 squeezed middle. Did they try to compete in other 00:18:10.369 --> 00:18:13.430 areas? They did. They introduced wide -body aircraft 00:18:13.430 --> 00:18:16.849 like the Airbus A300 and later the A330s for 00:18:16.849 --> 00:18:19.230 their long -haul routes, which was smart. The 00:18:19.230 --> 00:18:21.569 budget guys couldn't reach Florida or the Caribbean 00:18:21.569 --> 00:18:24.470 yet. But on the short haul, the bread and butter 00:18:24.470 --> 00:18:27.329 runs to Spain and Portugal. They were under siege. 00:18:28.039 --> 00:18:30.700 So how did they react to this existential threat? 00:18:30.900 --> 00:18:32.920 Did they just ignore it and hope it would go 00:18:32.920 --> 00:18:35.619 away? For a while, maybe. But they couldn't ignore 00:18:35.619 --> 00:18:38.150 it forever. Eventually, they had to pivot. And 00:18:38.150 --> 00:18:40.789 in 2004, they made a really drastic decision. 00:18:41.170 --> 00:18:43.470 They abandoned the charter -only model almost 00:18:43.470 --> 00:18:46.289 entirely and adopted what they called a modified 00:18:46.289 --> 00:18:49.150 low -cost model. Modified is one of those words 00:18:49.150 --> 00:18:50.750 that makes me nervous in a business plan. It 00:18:50.750 --> 00:18:53.069 sounds like a compromise. It was a huge compromise. 00:18:53.230 --> 00:18:54.970 They were trying to have their cake and eat it, 00:18:54.990 --> 00:18:57.369 too. They started charging for food and drink, 00:18:57.509 --> 00:18:59.470 just like the budget carriers. But they tried 00:18:59.470 --> 00:19:01.910 to keep some of the old frills to try and differentiate 00:19:01.910 --> 00:19:05.140 themselves. Like what? Well, back in the late 00:19:05.140 --> 00:19:07.460 90s, they had a service called Monarch Plus. 00:19:07.839 --> 00:19:10.759 For an extra fee, you could get pre -booked seats, 00:19:11.000 --> 00:19:15.180 and I'm not making this up, duck breast, in -flight. 00:19:15.529 --> 00:19:18.829 Meals. Duck breast. On a flight to Majorca. For 00:19:18.829 --> 00:19:20.970 a 30 pound supplement, yes. They were trying 00:19:20.970 --> 00:19:23.170 to be low cost luxury. But the problem is if 00:19:23.170 --> 00:19:25.450 I'm looking for a cheap flight, the last thing 00:19:25.450 --> 00:19:27.849 I want is a 30 pound duck breast. I want a 10 00:19:27.849 --> 00:19:30.670 pound saving on the ticket price. True. By 2004, 00:19:30.890 --> 00:19:33.069 they were chasing that low fare market aggressively, 00:19:33.269 --> 00:19:35.730 but they had all the legacy costs of a traditional 00:19:35.730 --> 00:19:39.269 airline, older staff on better contracts, a proper 00:19:39.269 --> 00:19:42.809 pension scheme, a more complex older fleet. EasyJet 00:19:42.809 --> 00:19:44.750 didn't have any of that baggage. And this air. 00:19:44.809 --> 00:19:47.829 the mid -2000s, this is where things start to 00:19:47.829 --> 00:19:51.500 get a... It feels like they were having a complete 00:19:51.500 --> 00:19:53.960 identity crisis. They seemed to be throwing absolutely 00:19:53.960 --> 00:19:55.799 everything at the wall just to see what would 00:19:55.799 --> 00:19:58.680 stick. Culturally, they were trying very, very 00:19:58.680 --> 00:20:01.559 hard to be cool. Oh, the pop culture phase. This 00:20:01.559 --> 00:20:04.700 is fascinating to look back on. In 2007, they 00:20:04.700 --> 00:20:07.579 did a partnership with the club brand Head Condi. 00:20:07.880 --> 00:20:11.220 No way, the CD compilation people. The ones with 00:20:11.220 --> 00:20:13.619 the sort of Art Deco cartoon girls on the cover? 00:20:13.619 --> 00:20:15.740 They're very same. They painted entire planes 00:20:15.740 --> 00:20:19.200 with special Fly Condi livery. Massive billboard 00:20:19.200 --> 00:20:22.059 titles like Umi and Ibiza on the side of the 00:20:22.059 --> 00:20:24.920 fuselage. They were running party flights to 00:20:24.920 --> 00:20:27.559 Ibiza. What did that even entail? Selling head 00:20:27.559 --> 00:20:30.000 condi CDs on board, blasting house music during 00:20:30.000 --> 00:20:33.079 boarding. It was a whole vibe. I mean, I guess 00:20:33.079 --> 00:20:34.339 you have to know your audience, right? If you're 00:20:34.339 --> 00:20:36.259 a group of 20 -somethings going to Ibiza, that's 00:20:36.259 --> 00:20:38.160 probably quite cool. But if you're a family of 00:20:38.160 --> 00:20:40.299 four going to Menorca for a quiet week. Do you 00:20:40.299 --> 00:20:42.460 really want a nightclub vibe at 30 ,000 feet? 00:20:42.599 --> 00:20:44.799 Probably not. It certainly grabbed headlines, 00:20:44.980 --> 00:20:49.119 though. But then, in 2008, we reached peak absurdity. 00:20:49.160 --> 00:20:51.700 We absolutely have to talk about Celebear. Oh, 00:20:51.700 --> 00:20:54.680 God. Please tell me this is exactly what I think 00:20:54.680 --> 00:20:58.519 it is. It was an ITV2 reality show. Monarch allowed 00:20:58.519 --> 00:21:01.900 a production company to take over an entire Airbus 00:21:01.900 --> 00:21:06.099 A321. And they had a roster of celebrities working 00:21:06.099 --> 00:21:09.079 as cabin crew. And when we say celebrities. We 00:21:09.079 --> 00:21:11.759 are using the term in its loosest possible sense. 00:21:11.920 --> 00:21:14.559 We're talking about Lisa Mafia from Solid Crew. 00:21:14.759 --> 00:21:17.460 Chico from X Factor. It's Chico time. Exactly. 00:21:17.740 --> 00:21:19.759 Imagine you've paid good money for your holiday. 00:21:19.880 --> 00:21:22.220 You're tired. You just want a gin and tonic. 00:21:22.220 --> 00:21:24.900 and to be left alone. And suddenly Chico is doing 00:21:24.900 --> 00:21:27.059 the safety demonstration and struggling to push 00:21:27.059 --> 00:21:29.500 the drinks trolley down the aisle on an actual 00:21:29.500 --> 00:21:31.900 fair paying flight. That is just incredible. 00:21:32.039 --> 00:21:34.380 It feels desperate. It shows a company that knows 00:21:34.380 --> 00:21:36.720 it can't beat Ryanair on price. So they're trying 00:21:36.720 --> 00:21:39.619 to beat them on celebrity vibes. Vibes and visibility. 00:21:39.900 --> 00:21:41.680 They were just desperate for differentiation. 00:21:42.779 --> 00:21:44.519 But to give them some credit, they were also 00:21:44.519 --> 00:21:48.259 quite tech forward in some ways. In 2007, they 00:21:48.259 --> 00:21:50.920 became the first European airline to accept PayPal 00:21:50.920 --> 00:21:53.440 for bookings. That was actually quite progressive 00:21:53.440 --> 00:21:55.519 for the time. They were trying to reach a younger 00:21:55.519 --> 00:21:58.859 online audience. But despite the duck breast, 00:21:59.079 --> 00:22:01.859 the house music and Chico, the financials were 00:22:01.859 --> 00:22:04.460 starting to tell a very different and much darker 00:22:04.460 --> 00:22:07.579 story. The fun and games were just masking a 00:22:07.579 --> 00:22:10.039 rot that was setting in. Right. We move into 00:22:10.039 --> 00:22:12.420 the 2010s, and the storm clouds are properly 00:22:12.420 --> 00:22:15.000 gathering now. 2009 is the real turning point. 00:22:15.160 --> 00:22:17.279 The world financial crisis has just happened, 00:22:17.299 --> 00:22:19.940 of course. And Monarch felt it badly. After years 00:22:19.940 --> 00:22:22.380 of pretty consistent profit, they posted a massive 00:22:22.380 --> 00:22:27.259 $32 .3 million in 2009. That is a huge, huge 00:22:27.259 --> 00:22:29.180 hole in the balance sheet for an airline of that 00:22:29.180 --> 00:22:31.420 size. Ouch. How did they plug that hole? The 00:22:31.420 --> 00:22:33.480 Mentegaza family stepped in again. They injected 00:22:33.480 --> 00:22:35.920 $45 million of their own money to save it. It 00:22:35.920 --> 00:22:38.480 was a lifeline. But you can imagine the conversations 00:22:38.480 --> 00:22:40.500 at the family dinner table in Switzerland were 00:22:40.500 --> 00:22:43.279 probably getting quite tense. I bet. And did 00:22:43.279 --> 00:22:45.759 they change strategy after that? Or just burn 00:22:45.759 --> 00:22:47.430 through the money doing the same thing? They 00:22:47.430 --> 00:22:50.210 tried to change. They formally rebranded to become 00:22:50.210 --> 00:22:53.329 a scheduled leisure airline. They announced they 00:22:53.329 --> 00:22:55.509 wanted 80 % of their business to be scheduled 00:22:55.509 --> 00:22:57.930 flights, moving even further away from those 00:22:57.930 --> 00:23:00.230 charter routes. They came up with a new slogan, 00:23:00.509 --> 00:23:03.589 fly your way every day. Sounds a bit generic, 00:23:03.690 --> 00:23:06.190 to be honest. It was. They tried to compete with 00:23:06.190 --> 00:23:08.650 the hated hidden fees of the budget airlines. 00:23:09.069 --> 00:23:12.369 They introduced a flat 10 pound fee for using 00:23:12.369 --> 00:23:15.309 a credit card, whereas others were charging percentages, 00:23:15.450 --> 00:23:17.609 which could be more. They were really trying 00:23:17.609 --> 00:23:20.329 to position themselves as the nice, low -cost 00:23:20.329 --> 00:23:22.990 airline. But as we know... Nice doesn't always 00:23:22.990 --> 00:23:25.349 pay the bills in that industry. No, because in 00:23:25.349 --> 00:23:27.930 2011, just two years after that first bailout, 00:23:27.990 --> 00:23:30.529 they lost another 45 million pounds. So the entire 00:23:30.529 --> 00:23:32.789 cash injection from the family is gone, just 00:23:32.789 --> 00:23:35.569 evaporated. Exactly. And the causes this time 00:23:35.569 --> 00:23:38.130 were largely external, which is part of the tragedy 00:23:38.130 --> 00:23:40.710 of the story. High jet fuel prices were crushing 00:23:40.710 --> 00:23:43.730 everyone, but also political turmoil in the Middle 00:23:43.730 --> 00:23:46.509 East, the Arab Spring. Why was the Arab Spring 00:23:46.509 --> 00:23:49.490 so specifically damaging for Monarch? Because 00:23:49.490 --> 00:23:51.829 Monarch had expanded heavily into destinations 00:23:51.829 --> 00:23:55.009 like Egypt, particularly Sharm el -Sheikh and 00:23:55.009 --> 00:23:58.640 Tunisia and Turkey, These were high margin destinations 00:23:58.640 --> 00:24:01.140 for them. Well, they were a bit further away, 00:24:01.200 --> 00:24:03.339 so the tickets were more expensive. But the hotels 00:24:03.339 --> 00:24:06.420 and ground costs were very cheap. It was a great 00:24:06.420 --> 00:24:08.759 value proposition for Brits looking for winter 00:24:08.759 --> 00:24:11.579 sun. But when the Arab Spring hit and you had 00:24:11.579 --> 00:24:14.279 riots and political instability plastered all 00:24:14.279 --> 00:24:17.039 over the news, tourists just stopped going. Right. 00:24:17.119 --> 00:24:18.960 You don't take your kids on holiday to a potential 00:24:18.960 --> 00:24:21.839 conflict zone. Precisely. So their most profitable 00:24:21.839 --> 00:24:24.759 routes basically dried up overnight. They needed 00:24:24.759 --> 00:24:27.240 another rescue package. This time it was $75 00:24:27.240 --> 00:24:30.000 million. But the writing was really on the wall 00:24:30.000 --> 00:24:32.140 for the original owners. The Mantegazza family 00:24:32.140 --> 00:24:35.160 had finally had enough. After all that time. 00:24:35.319 --> 00:24:37.660 It seems so. They had supported the airline for 00:24:37.660 --> 00:24:40.700 nearly 50 years, but they weren't willing to 00:24:40.700 --> 00:24:43.200 keep pouring good money after bad into what was 00:24:43.200 --> 00:24:46.359 becoming a black hole. In 2014, the airline was 00:24:46.359 --> 00:24:48.640 sold. And the terms of that sale tell you everything 00:24:48.640 --> 00:24:50.480 you need to know about the desperate state the 00:24:50.480 --> 00:24:52.519 company was in. How much did it sell for? It 00:24:52.519 --> 00:24:54.519 was sold to a private investment firm called 00:24:54.519 --> 00:24:57.500 Greybull Capital. And the price was nominal. 00:24:57.640 --> 00:24:59.660 It was almost certainly one pound. One pound. 00:24:59.720 --> 00:25:03.950 A 50 -year -old airline. Dozens of jets, thousands 00:25:03.950 --> 00:25:06.930 of staff, a household name, sold for a coin you 00:25:06.930 --> 00:25:08.750 find down the back of the sofa. And the deal 00:25:08.750 --> 00:25:11.289 happened just hours before its air operator certificate, 00:25:11.769 --> 00:25:14.630 its license to fly, was due to expire. It was 00:25:14.630 --> 00:25:17.710 that close to the edge, even back in 2014. So 00:25:17.710 --> 00:25:19.609 Gray Bull Capital takes over. Now, these guys 00:25:19.609 --> 00:25:21.369 are turnaround specialists, right? They aren't 00:25:21.369 --> 00:25:23.950 hoteliers with a passion for aviation like the 00:25:23.950 --> 00:25:26.549 men to Gaza's. They are hard -nosed money guys. 00:25:26.750 --> 00:25:30.079 What was their plan? Slash and burn. Or restructuring, 00:25:30.079 --> 00:25:32.559 if you want the polite corporate term. They looked 00:25:32.559 --> 00:25:34.420 at the books and said, this long haul stuff, 00:25:34.640 --> 00:25:37.519 it's too expensive, too complex. By April 2015, 00:25:37.759 --> 00:25:40.559 they had seized all long haul and charter operations 00:25:40.559 --> 00:25:43.099 completely. Wow. So no more flights to Orlando. 00:25:43.220 --> 00:25:45.839 No more charters for Cosmos. Gone. The link with 00:25:45.839 --> 00:25:47.900 their old parent company was finally severed. 00:25:47.920 --> 00:25:50.259 They stripped it all back to become a pure, lean, 00:25:50.400 --> 00:25:53.400 short -haul, low -cost carrier. They got rid 00:25:53.400 --> 00:25:55.759 of the wide -body Airbus planes and focused just 00:25:55.759 --> 00:25:58.859 on the A320s and A321s, just European holidays. 00:25:59.339 --> 00:26:02.000 And what about the staff? Big redundancies. And 00:26:02.000 --> 00:26:04.039 the remaining staff were forced to take significant 00:26:04.039 --> 00:26:06.400 pay cuts and accept worse conditions to save 00:26:06.400 --> 00:26:08.660 their jobs. It sounds like a desperate, last 00:26:08.660 --> 00:26:11.140 -ditch attempt to streamline. If we just make 00:26:11.140 --> 00:26:14.180 ourselves look exactly like EasyJet, maybe, just 00:26:14.180 --> 00:26:18.000 maybe. We can survive. That was the bet. But 00:26:18.000 --> 00:26:21.940 then we hit the period of 2015 to 2017. And this 00:26:21.940 --> 00:26:24.519 is where that perfect storm analogy really, truly 00:26:24.519 --> 00:26:27.500 holds up. You can have a bad strategy or you 00:26:27.500 --> 00:26:30.539 can have bad luck. In its final years, Monarch 00:26:30.539 --> 00:26:34.109 had both in spades. What happened next? First, 00:26:34.309 --> 00:26:36.490 a wave of terrorism that directly hit their core 00:26:36.490 --> 00:26:39.509 markets. We had the tragic beach attack in Tunisia. 00:26:39.630 --> 00:26:41.930 We had the bombing of their Russian airliner 00:26:41.930 --> 00:26:44.250 over Sharm el -Sheikh in Egypt. I remember that. 00:26:44.349 --> 00:26:46.809 The UK government banned all flights to Sharm 00:26:46.809 --> 00:26:49.569 as a result. Exactly. That was one of Monarch's 00:26:49.569 --> 00:26:52.009 biggest and most profitable winter sun earners. 00:26:52.539 --> 00:26:55.019 Gone. Wiped off the map. Then you had the attempted 00:26:55.019 --> 00:26:57.940 military coup in Turkey, another massive market 00:26:57.940 --> 00:27:00.619 for them, completely destabilized. So all the 00:27:00.619 --> 00:27:02.500 places where they actually made good money were 00:27:02.500 --> 00:27:04.220 suddenly off limits. Everyone just piled into 00:27:04.220 --> 00:27:07.019 Spain instead. Yes, but everyone else was flying 00:27:07.019 --> 00:27:11.240 to Spain too. Ryanair, EasyJet, Jet2. The competition 00:27:11.240 --> 00:27:13.299 there was absolutely ferocious, so the profit 00:27:13.299 --> 00:27:15.299 margins were tiny. They were fighting for scraps. 00:27:15.680 --> 00:27:19.500 And then in June 2016, the knockout blow, Brexit. 00:27:20.029 --> 00:27:22.589 The vote to leave the European Union. Now, putting 00:27:22.589 --> 00:27:25.329 all the politics aside, strictly from a business 00:27:25.329 --> 00:27:28.170 perspective, how did that hit an airline like 00:27:28.170 --> 00:27:31.029 Monarch? Currency. It is all about currency. 00:27:31.589 --> 00:27:34.049 Airlines are in a uniquely dangerous position. 00:27:34.569 --> 00:27:37.250 They pay for their two biggest cost fuel and 00:27:37.250 --> 00:27:39.329 aircraft leases in U .S. dollars. That's the 00:27:39.329 --> 00:27:42.430 global standard. But Monarch earned almost all 00:27:42.430 --> 00:27:45.190 of its revenue in British pounds from U .K. holidaymakers. 00:27:45.509 --> 00:27:47.630 And the pound absolutely crashed against the 00:27:47.630 --> 00:27:49.450 dollar after the vote. It plummeted. It fell 00:27:49.450 --> 00:27:51.730 off a cliff. So suddenly, every single gallon 00:27:51.730 --> 00:27:53.970 of fuel they bought and every monthly lease payment 00:27:53.970 --> 00:27:56.250 on their planes became significantly more expensive 00:27:56.250 --> 00:27:59.089 overnight. But their revenue stayed exactly the 00:27:59.089 --> 00:28:00.869 same because they couldn't just ask passengers 00:28:00.869 --> 00:28:02.769 for more money for tickets they'd already booked. 00:28:02.950 --> 00:28:05.289 It just created this. massive unfillable hole 00:28:05.289 --> 00:28:07.509 in the balance sheet. A black hole. Yeah. So 00:28:07.509 --> 00:28:11.210 we get to late 2016. I remember seeing tweets 00:28:11.210 --> 00:28:13.170 about it at the time. There were rumors flying 00:28:13.170 --> 00:28:16.970 around. September 2016. Rumors of an imminent 00:28:16.970 --> 00:28:19.269 bankruptcy started swirling on social media. 00:28:19.809 --> 00:28:23.250 The Civil Aviation Authority, the CAA, was so 00:28:23.250 --> 00:28:25.069 worried they secretly started booking what they 00:28:25.069 --> 00:28:28.130 called shadow airlines. Shadow airlines. That 00:28:28.130 --> 00:28:29.650 sounds like something out of a spy movie. What 00:28:29.650 --> 00:28:32.059 does that actually mean? It means the CAA knew 00:28:32.059 --> 00:28:34.240 that if Monarch collapsed, they'd have over 100 00:28:34.240 --> 00:28:37.640 ,000 people stranded abroad. So they quietly 00:28:37.640 --> 00:28:40.579 started paying other Airlines United, Air Transat, 00:28:40.599 --> 00:28:43.579 a whole range of charter carriers to fly empty 00:28:43.579 --> 00:28:46.400 planes to European holiday airports and just 00:28:46.400 --> 00:28:49.019 park them there on standby just in case. Wow. 00:28:49.140 --> 00:28:51.039 They spent millions of pounds just positioning 00:28:51.039 --> 00:28:53.180 these assets to be ready for a rescue that hadn't 00:28:53.180 --> 00:28:55.160 even happened yet. But Monarch survived that 00:28:55.160 --> 00:28:57.599 scare in 2016. By the absolute skin of their 00:28:57.599 --> 00:29:00.859 teeth. They got 165 million investment at the 00:29:00.859 --> 00:29:03.460 very last minute. Now, at the time, everyone 00:29:03.460 --> 00:29:05.279 thought this was Grebel putting more money in. 00:29:05.619 --> 00:29:07.799 But it was later revealed in the insolvency reports 00:29:07.799 --> 00:29:09.740 that the vast majority of that money actually 00:29:09.740 --> 00:29:12.900 came from Boeing. Boeing. The aircraft manufacturer. 00:29:13.519 --> 00:29:16.019 Why on earth would Boeing bail out a struggling 00:29:16.019 --> 00:29:19.339 UK holiday airline? Because Monarch had a massive 00:29:19.339 --> 00:29:23.440 order on the books for 30 brand new Boeing 737 00:29:23.440 --> 00:29:26.940 MX aircraft. Boeing wanted to keep their customer 00:29:26.940 --> 00:29:29.079 alive long enough to take delivery of those planes 00:29:29.079 --> 00:29:31.380 and pay for them. It was basically a vendor financing 00:29:31.380 --> 00:29:33.839 deal designed to keep their own order book intact. 00:29:34.099 --> 00:29:36.759 That is a detail I did not know. So Boeing was 00:29:36.759 --> 00:29:38.680 effectively propping them up just to sell them 00:29:38.680 --> 00:29:40.319 new planes they probably couldn't afford anyway. 00:29:40.539 --> 00:29:43.029 Essentially. Yes, it was a lifeline born of self 00:29:43.029 --> 00:29:44.849 -interest, but it only bought them one more year. 00:29:44.970 --> 00:29:48.069 We moved to September 2017. The Atoll license 00:29:48.069 --> 00:29:50.450 is up for renewal again. And this time there's 00:29:50.450 --> 00:29:53.529 no white knight, no Boeing, no Grable, no last 00:29:53.529 --> 00:29:55.950 minute savior. No, the losses were just too big. 00:29:56.049 --> 00:29:58.950 On September 30th, the CAA granted Monarch a 00:29:58.950 --> 00:30:02.250 license extension, but only for 24 hours. That 00:30:02.250 --> 00:30:05.119 is the death knell, isn't it? A 24 -hour license 00:30:05.119 --> 00:30:07.680 isn't a license to operate. It's a license to 00:30:07.680 --> 00:30:09.779 tidy your desk and turn out the lights. It is. 00:30:09.880 --> 00:30:12.900 And in those final desperate days, Monarch did 00:30:12.900 --> 00:30:16.200 something quite controversial and actually quite 00:30:16.200 --> 00:30:19.059 telling. They tripled their fares. I heard about 00:30:19.059 --> 00:30:21.490 this. Why would they do that? If you're about 00:30:21.490 --> 00:30:23.609 to go bust, why would you triple the prices? 00:30:23.789 --> 00:30:27.150 Were they trying to gouge one last bit of profit? 00:30:27.390 --> 00:30:29.690 It was actually the exact opposite. It was a 00:30:29.690 --> 00:30:31.990 deliberate attempt to price themselves out of 00:30:31.990 --> 00:30:33.410 the market. They didn't want to take any more 00:30:33.410 --> 00:30:36.609 bookings because the directors knew legally that 00:30:36.609 --> 00:30:38.930 they probably couldn't fulfill them. I see. If 00:30:38.930 --> 00:30:40.950 they took money from customers knowing they were 00:30:40.950 --> 00:30:43.150 about to go bust, that could be considered fraud. 00:30:43.589 --> 00:30:47.430 So by making the tickets ridiculously transparently 00:30:47.430 --> 00:30:49.769 expensive, they discouraged anyone from booking 00:30:49.769 --> 00:30:51.980 without... having to technically close the shop. 00:30:52.119 --> 00:30:54.819 It was a quiet signal to the world, don't buy 00:30:54.819 --> 00:30:57.460 this. And meanwhile, behind the scenes, the CAA 00:30:57.460 --> 00:30:59.900 is assembling the rescue fleet again. The shadow 00:30:59.900 --> 00:31:02.440 fleet. And this time it was for real. The scale 00:31:02.440 --> 00:31:05.549 of it was unprecedented. They lined up 38 aircraft 00:31:05.549 --> 00:31:08.089 from 15 different operators. We're talking Qatar 00:31:08.089 --> 00:31:10.549 Airways, Air Transat, Titan Airways. The Qatar 00:31:10.549 --> 00:31:13.549 Airways. They had Qatar Airways wide -body jets 00:31:13.549 --> 00:31:17.589 like A330s parked at British airports just waiting 00:31:17.589 --> 00:31:20.089 for the signal to go. That must have been a surreal 00:31:20.089 --> 00:31:23.029 sight for the plane spotters, seeing a huge... 00:31:23.259 --> 00:31:26.900 premium Qatar Airways jet at a regional UK airport, 00:31:27.180 --> 00:31:29.380 getting ready to pick up tourists coming back 00:31:29.380 --> 00:31:31.839 from Spain. It all came to a head on the night 00:31:31.839 --> 00:31:34.759 of October 1st, going into October 2nd, 2017. 00:31:35.079 --> 00:31:37.240 The day it all stops. Late that night, flights 00:31:37.240 --> 00:31:39.980 that were due to depart, like one to Ibiza, were 00:31:39.980 --> 00:31:41.900 canceled right at the boarding gate. Can you 00:31:41.900 --> 00:31:43.900 just imagine standing there, boarding pass in 00:31:43.900 --> 00:31:45.500 your hand, you can see the plane on the tarmac, 00:31:45.579 --> 00:31:47.859 and the screen just goes blank and says canceled. 00:31:48.180 --> 00:31:51.319 Utterly devastating. The final flight to ever 00:31:51.319 --> 00:31:55.039 operate under a monarch call sign was ZB 3785 00:31:55.039 --> 00:31:58.700 coming in from Tel Aviv to Manchester. It landed 00:31:58.700 --> 00:32:02.279 at 03 .19 British summertime. Less than an hour 00:32:02.279 --> 00:32:04.980 later, at 4 a .m., the administration was formally 00:32:04.980 --> 00:32:07.759 announced. Lights out. Immediate cessation of 00:32:07.759 --> 00:32:11.920 all operations. 110 ,000 people abroad. 300 ,000 00:32:11.920 --> 00:32:14.200 future bookings canceled. The 50 -year -old brand 00:32:14.200 --> 00:32:17.279 was dead. And so began the aftermath, the enormous 00:32:17.279 --> 00:32:20.000 cleanup operation. They called it Operation Matterhorn, 00:32:20.099 --> 00:32:22.539 the repatriation operation. It cost the public 00:32:22.539 --> 00:32:24.900 purse $60 million. Who pays for that? Is that 00:32:24.900 --> 00:32:27.839 the taxpayer? Not directly, no. It's paid for 00:32:27.839 --> 00:32:30.579 by the Air Travel Trust Fund, which is funded 00:32:30.579 --> 00:32:34.019 by that little £2 .50 atoll protection contribution 00:32:34.019 --> 00:32:35.980 you see on your invoice when you book a package 00:32:35.980 --> 00:32:39.240 holiday. That fund paid for this massive operation, 00:32:39.579 --> 00:32:42.400 chartering everything from Boeing 737s all the 00:32:42.400 --> 00:32:46.500 way up to 747 jumbo jets to ferry people home 00:32:46.500 --> 00:32:49.579 over two weeks. It was the UK's biggest peacetime 00:32:49.579 --> 00:32:52.160 repatriation, wasn't it? At least until Thomas 00:32:52.160 --> 00:32:54.819 Cook happened two years later. Correct. In many 00:32:54.819 --> 00:32:57.180 ways, Monarch was the dress rehearsal for the 00:32:57.180 --> 00:33:00.339 Thomas Cook collapse. It taught the CAA and the 00:33:00.339 --> 00:33:03.019 government how to handle a failure of that magnitude. 00:33:03.299 --> 00:33:05.099 Before we wrap up the timeline and look at the 00:33:05.099 --> 00:33:06.660 legacy, I want to touch on something from the 00:33:06.660 --> 00:33:09.700 source material, the serious detail, safety incidents. 00:33:10.019 --> 00:33:12.440 Because while Monarch had a generally good safety 00:33:12.440 --> 00:33:14.980 record over 50 years, there were a couple of 00:33:14.980 --> 00:33:16.660 moments that really stand out in the report, 00:33:16.839 --> 00:33:19.119 and they explain some fascinating technical things 00:33:19.119 --> 00:33:21.059 about aviation. Yes, and these are important 00:33:21.059 --> 00:33:23.470 for the real aviation geeks listening. was back 00:33:23.470 --> 00:33:27.369 in 1985, an incident with aircraft GMOND. It 00:33:27.369 --> 00:33:30.069 was a Boeing 757, one of their new ones, flying 00:33:30.069 --> 00:33:33.069 from Tenerife to Luton. What happened? Over Portugal, 00:33:33.230 --> 00:33:36.710 passengers heard two loud explosions. Smoke started 00:33:36.710 --> 00:33:39.390 filling the cabin. The aircraft lost a significant 00:33:39.390 --> 00:33:42.410 amount of its electrical power. That is the absolute 00:33:42.410 --> 00:33:45.109 nightmare scenario. Smoke in the cockpit, smoke 00:33:45.109 --> 00:33:47.230 in the cabin. They made a successful emergency 00:33:47.230 --> 00:33:50.619 landing in Porto. And the cause was just bizarre. 00:33:50.779 --> 00:33:53.440 It was leaking lavatory fluid. The blue toilet 00:33:53.440 --> 00:33:56.019 water. The fluid, yeah. Leaking inside the fuselage, 00:33:56.019 --> 00:33:58.440 not frozen on the outside. It dripped down onto 00:33:58.440 --> 00:34:01.359 a bundle of electrical wiring. Now, here is the 00:34:01.359 --> 00:34:03.420 really technical part. The wiring insulation 00:34:03.420 --> 00:34:06.099 back then was a material called Kapton. When 00:34:06.099 --> 00:34:08.000 this fluid hit it, it caused something called 00:34:08.000 --> 00:34:10.260 arc tracking. Which is? Basically, the electricity 00:34:10.260 --> 00:34:13.019 jumps between the wires and burns along the insulation 00:34:13.019 --> 00:34:15.760 like a fuse, creating intense heat and smoke. 00:34:16.219 --> 00:34:18.980 It was the first known major captain -related 00:34:18.980 --> 00:34:22.039 problem on a British jet. It led to major changes 00:34:22.039 --> 00:34:24.440 in how aircraft wiring is insulated and protected. 00:34:24.739 --> 00:34:28.880 And the other incident. 2002. Gibraltar. Aircraft 00:34:28.880 --> 00:34:31.940 G. M -O -N -C. Now, have you ever flown into 00:34:31.940 --> 00:34:34.159 Gibraltar? I haven't, but I've seen the videos. 00:34:34.340 --> 00:34:36.519 Yeah. The runway that crosses the main road. 00:34:37.239 --> 00:34:39.059 You've got the giant rock on one side and the 00:34:39.059 --> 00:34:42.159 ocean on the other. It is a notoriously difficult 00:34:42.159 --> 00:34:45.300 and dangerous airport. The rock causes massive, 00:34:45.440 --> 00:34:48.699 unpredictable wind shear. The captain on this 00:34:48.699 --> 00:34:51.079 flight used an incorrect landing technique to 00:34:51.079 --> 00:34:53.719 try and fight that wind. He applied full nose 00:34:53.719 --> 00:34:56.539 down elevator just before touchdown. Basically, 00:34:56.559 --> 00:34:59.500 he pitched the nose down far too hard. Far too 00:34:59.500 --> 00:35:02.139 fast. He slammed it onto the runway. He slammed 00:35:02.139 --> 00:35:04.820 it down so hard that the fuselage, the actual 00:35:04.820 --> 00:35:07.559 metal skin of the plane, buckled. It creased. 00:35:07.599 --> 00:35:09.800 The structural damage was so severe the plane 00:35:09.800 --> 00:35:11.880 was written off. But they landed safely. They 00:35:11.880 --> 00:35:15.239 landed. No fatalities. But it was a stark reminder 00:35:15.239 --> 00:35:18.400 of the incredibly thin margins of air in aviation. 00:35:19.039 --> 00:35:21.119 If he had pushed just a little bit harder, the 00:35:21.119 --> 00:35:22.639 aircraft could well have broken apart on the 00:35:22.639 --> 00:35:24.820 runway. So we look back at Monarch now. It's 00:35:24.820 --> 00:35:27.170 been a few years. The dust has well and truly 00:35:27.170 --> 00:35:30.170 settled. What is the final legacy? It's complex, 00:35:30.289 --> 00:35:32.389 isn't it? On the one hand, you have the deeply 00:35:32.389 --> 00:35:35.570 human element. 2 ,300 employees lost their jobs 00:35:35.570 --> 00:35:37.989 that morning in 2017. Many of them found out 00:35:37.989 --> 00:35:39.989 via text message or by seeing it on the news. 00:35:40.269 --> 00:35:42.429 These were generations of families who had worked 00:35:42.429 --> 00:35:45.179 for the airline. And millions, literally millions 00:35:45.179 --> 00:35:48.019 of people who took their first ever flight, their 00:35:48.019 --> 00:35:51.400 first foreign holiday on a monarch plane with 00:35:51.400 --> 00:35:53.719 that gold and purple crown on the tail. Exactly. 00:35:53.719 --> 00:35:56.019 They were a genuine pioneer. They moved from 00:35:56.019 --> 00:35:58.860 turboprops to jets, from charters to scheduled 00:35:58.860 --> 00:36:01.760 flights. They democratized the Spanish holiday 00:36:01.760 --> 00:36:03.840 for the British public. But on the other hand. 00:36:03.920 --> 00:36:06.099 They simply couldn't pit it fast enough at the 00:36:06.099 --> 00:36:08.360 end of the day. They were a legacy company trying 00:36:08.360 --> 00:36:11.070 to play a startup's game. They had high legacy 00:36:11.070 --> 00:36:14.309 costs, a big pension deficit and an aging fleet. 00:36:14.650 --> 00:36:17.829 And they were trying to fight these lean, mean, 00:36:17.909 --> 00:36:21.289 non -unionized machines like Ryanair and EasyJet. 00:36:21.409 --> 00:36:23.829 And when you add that toxic cocktail of terrorism 00:36:23.829 --> 00:36:26.170 and the Brexit currency crash to that already 00:36:26.170 --> 00:36:28.590 fragile mix. It was just insurmountable. The 00:36:28.590 --> 00:36:31.010 margins in this industry are razor, razor thin. 00:36:31.090 --> 00:36:33.269 We are talking pennies on the pound profit per 00:36:33.269 --> 00:36:35.250 passenger. You need pretty much everything to 00:36:35.250 --> 00:36:37.889 go right all the time. For Monarch in those final 00:36:37.889 --> 00:36:41.219 two years. Literally everything went wrong all 00:36:41.219 --> 00:36:43.519 at once. It really makes you think about the 00:36:43.519 --> 00:36:45.800 fragility of it all, doesn't it? We assume these 00:36:45.800 --> 00:36:48.380 huge 50 -year -old brands are permanent fixtures, 00:36:48.480 --> 00:36:51.539 but they rely on such a specific set of conditions. 00:36:52.039 --> 00:36:54.559 People feeling safe enough to travel and their 00:36:54.559 --> 00:36:57.179 money being worth enough to spend. Exactly that. 00:36:58.000 --> 00:37:00.500 Monarch's entire business model relied on confidence. 00:37:00.619 --> 00:37:03.139 When the fear of terrorism met the falling pound, 00:37:03.239 --> 00:37:05.800 that confidence shattered and the business model 00:37:05.800 --> 00:37:09.619 just... It was too fragile to survive. And with 00:37:09.619 --> 00:37:11.539 Thomas Cook following them into oblivion not 00:37:11.539 --> 00:37:14.320 long after, does the monarch's story really mark 00:37:14.320 --> 00:37:17.059 the definitive end of that traditional British 00:37:17.059 --> 00:37:19.659 holiday company? That is the big provocative 00:37:19.659 --> 00:37:22.599 question, isn't it? The old model of we do it 00:37:22.599 --> 00:37:25.420 all for you, the package deal. It has largely 00:37:25.420 --> 00:37:28.960 been replaced by do it yourself on an app. Monarch 00:37:28.960 --> 00:37:30.900 was the bridge between those two worlds, and 00:37:30.900 --> 00:37:32.980 eventually the weight of the new world just became 00:37:32.980 --> 00:37:35.340 too much, and the bridge collapsed. A sobering 00:37:35.340 --> 00:37:36.780 thought for the next time we're all clicking 00:37:36.780 --> 00:37:39.440 book on a cheap flight. Thank you for walking 00:37:39.440 --> 00:37:41.320 us through that. It's an incredible piece of 00:37:41.320 --> 00:37:43.659 British industrial history. My pleasure. It's 00:37:43.659 --> 00:37:46.179 a fascinating story. And thank you for listening 00:37:46.179 --> 00:37:49.320 to this deep dive into Monarch Airlines. We will 00:37:49.320 --> 00:37:51.519 catch you on the next one. Safe travels.