Welcome back to the Deep Dive. Today, we are
opening a file that I think is going to trigger
a very, very specific kind of nostalgia for a
lot of people. It's a mix of fond memories, you
know, that smell of sun cream, the rush of heat
when the cabin doors open, but also a really
sharp, almost painful reminder of how quickly
these huge business empires can just... It's
true. We were talking about the rise, the glory
days, and the absolute catastrophic implosion
of Monarch Airlines. It is a story that just
has everything, doesn't it? It's got genuine
business lessons. It's got incredible technological
breakthroughs. And then as we get towards the
end, it just descends into this sort of chaos
of reality TV and geopolitical nightmares. It
really does. It really marks the definitive end
of an era in British travel, I think. And we
aren't just talking about, you know, a shop.
closing down on the high street here, we really
need to set the scale for everyone listening
right from the very start. When Monarch went
under in October 2017, this was not a small ripple
in the pond. No, it was a tsunami. At that specific
moment in time, it was the largest airline failure
in UK history. The numbers are actually, they're
difficult to visualize until you really break
them down. Right. You get 110 ,000 people. I
mean, think about that. 110 ,000 families, couples,
retirees, just stranded abroad. instantly it's
gone one minute you're sipping a sangria in minorca
thinking about your flight home tomorrow and
the next minute that flight literally does not
exist the plane just isn't coming And that's
just the people who were already out there. That's
the immediate, you know, the crisis on the ground.
Right. But the bigger number, the one that really
hurt the economy, and I think public trust, was
the 300 ,000 future bookings. They just vanished
into thin air overnight. That's 300 ,000 holidays
canceled, wedding anniversaries ruined, honeymoons
that just... didn't happen. It was a mass extinction
event for holiday clans. So our mission today,
looking at these historical records we've got,
the accident reports, the financial timelines,
it's to answer one really big question. How?
How does a company that was basically the furniture
of the holiday industry for 50 years, a company
that so successfully democratized travel for
the working class, how does it end up succumbing
to this perfect storm? It is the ultimate question,
isn't it? Because on the surface, if you just
look at the headlines from 2017, it just looks
like a string of bad luck. You know, terror attacks,
Brexit, fuel prices. Right. But when you actually
dig into the sources, you see 50 years of very
specific decisions that left them vulnerable
when that storm finally hit. Yeah. We're going
to look at planes nicknamed Whispering Giants.
We're going to look at a secret government operation
to bring people home. And yes, we are absolutely
going to talk about the time they tried to save
the airline using C -list celebrities serving
drinks at 30 ,000 feet. I cannot wait to get
to the celebrity part. It feels like a fever
dream. But let's not get ahead of ourselves.
We need to rewind. We need to go way back to
a world before the Internet, before budget airlines,
before security lines were three hours long.
Let's go to June 5th, 1967. The Summer of Love.
But in the aviation world, it was the summer
of opportunity. And this is where we meet two
guys, Bill Hodgson and Don Peacock. The founders.
Yeah. Who were these guys? Were they just sort
of wealthy eccentrics who wanted to fly planes?
Not at all. Not at all. These guys weren't fresh
faced dreamers. They were real aviation veterans.
They'd previously been directors at another airline
called British Eagle. Right. But they looked
at the market in 67 and they saw a massive gap.
You have to remember, in the mid 60s, flying
was still. Well, it was posh, wasn't it? It was
for the jet set. Right. People dressed up to
fly. It was expensive. It was exclusive. You
didn't just hop on a plane. Precisely. Hodgson
and Peacock, they had a completely different
vision. They wanted to build an airline for the
average family. They weren't chasing the businessmen
in the suit flying to New York. They were chasing
the factory worker from Luton who wanted two
weeks of guaranteed sun in Spain. They saw the
potential for mass tourism before it had really,
truly exploded. So they basically wanted to be
the bus service to the coast of El Sol. In the
best possible way, yes. But here's the thing
about airlines, and it's as true today as it
was in 1967. They are incredibly eye -wateringly
expensive to start. You need planes, you need
fuel, you need licenses. Two guys with a great
vision that doesn't pay for a fleet. They needed
muscle, financial muscle. And this brings us
to a name that keeps popping up again and again
in the documents. The Montegasa family. The Swiss
powerhouses. This is absolutely crucial to understanding
Monarch's DNA right from the very beginning.
The Montegasa family owned Cosmos Tours. Cosmos.
Yeah, I remember the commercials. So connect
the dots for me. Why does a Swiss tour operator
need its own British airline? It's vertical integration.
It's a business buzzword now. But back then,
it was just incredibly smart strategy. Think
about it. Cosmos sells the package, the hotel,
the transfer. the holiday rep right but they
were relying on other airlines to get the customers
there that means they were totally at the mercy
of other companies prices their schedules their
reliability if you start your own airline You
control the entire chain. You control the cost,
the schedule, the experience from start to finish.
You aren't just renting the bus anymore. You
own the bus. You own the bus. Exactly. The airline
was operated as a subsidiary of a company called
Globus Getaway Holdings, which was the Montegaza's
main holding company. And this gave Monarch a
massive, massive advantage right out of the gate.
Because they didn't have to find customers. They
didn't have to spend a single penny on advertising
to find customers. Cosmos just handed them the
passengers. It's an incredible safety net for
a startup. That is a nice way to start a business.
So they've got the money. They've got the passengers.
When do they actually get a plane in the air?
Yeah. April 5th, 1968. That's when commercial
operations launch with a flight from Luton to
Madrid. Luton Airport. I feel like we can't tell
this story without acknowledging Luton. It really
is the spiritual home of the British charter
flight, isn't it? It absolutely is. And back
in 68, it was the Wild West compared to today.
But Monarch wasn't flying jets yet. Not in 68.
Their first workhorse was a plane called the
Bristol 175 Britannia 300. The Britannia. I'm
looking at a picture of this in the notes. It's
not a jet, is it? It's got propellers. It's a
turboprop, a big, lovely four -engine beast.
They actually bought their first two from Caledonian
Airways. And for the passengers, this was, well,
it was an experience. It wasn't the smooth, silent
whoosh of a modern jet. It was loud, it vibrated,
and it definitely took a bit longer to get to
Spain. But it was a reliable old thing. And I'm
guessing cheaper to run than the early jets?
Significantly cheaper. And that was the whole
point, because they were trying to keep the ticket
prices right down for that average family. And
it worked. I mean, the growth was just explosive.
By 1969, which was only their second year of
operation, they hit 250 ,000 passengers. That
seems incredibly fast for a startup airline in
the 60s. It was rampant. They actually had to
go out and buy more Britannias from the administrators
of their old employer, British Eagle, which had
gone bust by then. Oh, there's a bit of delicious
irony there. Buying the bones of your old company
to build your new one. It's a recurring theme
in aviation, isn't it? It's a cannibalistic industry.
But as we move into the 1970s, that whole propeller
era is starting to look a bit, well, a bit vintage.
Yeah. The world is speeding up. People don't
want to spend four hours vibrating on a turboprop
if they can get there in two hours on a sleek
new jet. So enter the jet age. This is where
the company really starts to look like the monarch.
that people of a certain age will remember. 1971.
This is a huge milestone. Monarch acquires three
Boeing 720Bs. Now, for the non -aviation geeks
listening, and I definitely include myself in
that. What exactly is a 720B? Is that like a
707? It's a variant of the 707, yeah. A slightly
shorter, lighter version, but it's a proper four
-engine jetliner. Sleek, fast, shiny. And this
is where we get one of those great little historical
nuggets that you find in the sources. Get one.
Co -founder Bob Hodgson absolutely loved these
planes. He was so proud of them, he gave them
a nickname. He called them the Whispering Giants.
Whispering Giants. That sounds like some good
old marketing speak to me. Were they actually
quiet? Well, everything's relative, isn't it?
Compared to the rattling roar of the piston engines
and the deep drone of the turboprops they were
replacing, yes, they absolutely whispered. I
suppose so. They offered a much smoother, faster,
higher ride. It was the moment Monarch stopped
being a sort of budget alternative and started
looking like a proper modern airline. By 1976,
they retired the very last Britannia, sold it
to a Greek cargo outfit, and went all jet. So
they are flying high, literally. New jets. Growing
passenger numbers. But the 1970s wasn't exactly
a smooth ride for the world economy, was it?
No. And this is where the story gets really,
really interesting from a business resilience
perspective. We have to talk about the 1973 -74
crisis. The oil crisis. The energy crisis was
absolutely brutal for aviation. The price of
oil didn't just go up a bit, it quadrupled. Now
imagine you are an airline. Fuel is your single
biggest cost. All of a sudden, your entire business
model is on fire. And at the same time, people
have less money to spend on holidays because
inflation is going completely crazy. It's the
perfect double whammy. Your costs go through
the roof and your demand goes through the floor.
And casualties were happening. Have you ever
heard of Courtline? The name rings a bell. They
were big, right? Yeah. With the brightly colored
planes. They were huge. They were the biggest
rival in the package holiday sector. They owned
Clarkson's Tours. They had these bright, multicolored
planes, pink, orange, turquoise. They were the
absolute market leaders. And in August 1974,
they collapsed. Went into receivership. It was
a national scandal. So the big dog in the industry
dies. What does Monarch do? Do they panic? Monarch
feasts. This is the difference between being
over leveraged and having that conservative Swiss
backing we talked about earlier. When Courtline
failed, Monarch didn't panic. They swooped in.
Wow. They hired the pilots and the cabin crew
who had lost their jobs overnight and they acquired
the aircraft, specifically the BAC -111 -500s
from the liquidator. That is Ruthless, but incredibly
effective. It absolutely solidified their position.
While the market leader was imploding in a very
public way, Monarch was quietly shopping for
Bardens in the wreckage. It proved that their
vertical integration model with the Mantegazas
was just incredibly robust. They had a financial
safety net that Courtline simply didn't. So they
survived the 70s. In fact, they come out of it
stronger. Now we hit the 1980s. Big hair, shoulder
pads, and apparently some big, big risks for
Monarch. The 80s were the decade where monarchs
stopped just playing it safe and reacting. They
started to innovate. In 1980, they modernized
with brand new Boeing 737 -200s. But there's
a detail in the records here that I just love,
and it's a bit of a geopolitical oddity. They
weren't just flying out of Luton anymore. They
opened a base in Berlin. Berlin. Hang on. This
is the 1980s. The wall is still very much up.
We're talking West Berlin. West Berlin. Tegel
Airport. They secured a contract with a German
tour operator called Flug Union Berlin. Now you
have to think about the geography here. West
Berlin was this island of democracy completely
surrounded by communist East Germany. Right.
Deep inside the Soviet sector. And because of
the post -war treaties, only airlines from the
Allied powers, the UK, the USA and France, were
allowed to fly into West Berlin. Lufthansa, the
German national carrier, was actually banned
from flying to Berlin. Oh, that is fascinating.
So because it was technically still occupied
territory, German airlines were locked out of
their own capital city. Precisely. British, American
and French airlines had a total monopoly on the
Berlin market. And Monarch tapped right into
that. They were flying German tourists from West
Berlin down to the Mediterranean. It just shows
they were always looking for these clever, opportunistic
revenue streams outside of just the UK summer
holiday maker. Very smart. But you mentioned
a big risk in the intro to this section. Yeah.
It wasn't the Berlin base. No. The Boeing 757,
this is 1981, Monarch became the first charter
airline to order the Boeing 757 -200. Why is
that considered such a big risk? It's just another
plane, isn't it? isn't it? Oh, no. It was a brand
new type of plane. This is the thing. Usually,
charter airlines are the scavengers of the industry.
They wait for British Airways or Lufthansa to
use a plane for 15 years, then they buy it secondhand.
It's much, much cheaper. Right. For a relatively
small charter airline like Monarch to order brand
new 757s directly from the factory in Seattle,
that was a massive statement of intent. It was
incredibly expensive. They were betting the farm
on efficiency and new technology. And on capacity.
The 757 was a complete game changer for the holiday
industry. It was a single aisle plane, but it
was long and powerful. It could carry over 200
people and it had incredible performance. It
became the absolute workhorse of the industry.
If you went on holiday in the 90s or 2000s, you
almost certainly flew on a 757. It was a good
bet then. A fantastic bet. It combined the range
to reach the Canaries or Greece easily with the
economics of a smaller plane. It was perfect.
Perfect. But the innovation wasn't just about
the hardware, was it? The whole business model
started to shift in the mid 80s as well. This
is the Crown Service era. In 1985, the Civil
Aviation Authority, the CAA, granted monarch
licenses for scheduled services for the first
time. OK, we need to pause and just unpack that
distinction because it's absolutely vital for
the rest of the story. Charter versus scheduled.
What is the actual difference for the person
sitting in seat 14A? Okay. A charter flight is
basically a flight that's bought in bulk as part
of a package. You go to a travel agent, you buy
a week in Benidorm, and the flight is just the
bus that takes you there. You don't really pick
the airline. The tour operator, like Cosmos,
does. And the plane goes where the tour operator
tells it to. Exactly. And if the tour operator
doesn't sell enough holidays for that week, the
flight might be canceled or combined with another
one. It's reactive. Right. A scheduled flight
is like British Airways or Pan Am back then.
You go to the airline's website or ticket desk
and you buy a ticket from Luton to Malaga at
a set time on a set day. The plane flies that
route regardless of whether you have a hotel
booked or not. It runs on a schedule. It's a
commitment. So by launching scheduled services,
Monarch was stepping into the big leagues. They
were basically saying, we aren't just a holiday
bus anymore. We are a real airline. That's it
exactly. They launched Monarch Crown Service.
They flew to Malaga, Menorca, Tenerife. They
were trying to build a standalone brand. They
wanted people to choose to fly with Monarch,
not just choose to go on holiday with Cosmos.
It was a huge step towards diversifying their
business. And this confidence, this new technology,
it led to some pretty serious aviation milestones.
I'm seeing something here about ETA -PS. ETA
-PS, yes. This is one of my favorite nerdy aviation
topics. It stands for Extended Range Twin Engine
Operational Performance Standards. Getchy. Rules
right off the top. It's a mouthful. But the concept
is revolutionary. For decades, if you wanted
to fly across a huge body of water like the Atlantic,
you needed more than two engines. You needed
three or four. Think of the 747 or the DC -10.
Because if one engine fails, you have backups.
You're not going to fall out of the sky. Right.
The logic was if you only have two engines and
one fails over the middle of the ocean, you are
in very big trouble. The regulations said a twin
-engine plane had to stay within 60 minutes of
a suitable airport at all times. Which makes
crossing the Atlantic impossible. Exactly, because
the ocean is much wider than that. You'd have
to hug the coast of Greenland and Iceland, which
takes forever and burns far too much fuel. It
wasn't viable. So you just couldn't take a direct
path. No. But engines got more and more reliable.
In the 80s, Boeing and the regulators started
testing the idea that these new jets like the
757 were so reliable that you could trust them
to fly further from an airport on just one engine
if necessary. And in 1988, Monarch operated the
first ETA -PS transatlantic operation by a British
twin jet. They flew a 757 all the way across
the pond. They flew from Luton to Orlando with
a refueling stop in Gander, Canada. Luton to
Orlando on a single aisle plane. That sounds
intimate. A long day at the office? It was a
long day, for sure. Six or seven hours in a narrow
tube. But for the airline, it was revolutionary.
It meant they could fly families directly to
Disney World efficiently, without needing to
fill a massive 400 -seat jumbo jet. It opened
up the long -haul leisure market to the middle
class in a way that hadn't been possible before.
And the numbers reflected this success? Hugely.
By 1988, thanks to all these moves, they were
carrying over 2 million passengers a year. So
they're flying high. They've got the scheduled
flights, the shiny new planes, the transatlantic
routes. They are absolutely the kings of the
castle. But then the 1990s arrive. And with the
90s comes a new color that would haunt them for
the rest of their existence. Orange. Enter EasyJet.
And, of course, Ryanair. The 1990s completely
changed the fundamental physics of aviation in
Europe. This was the disruption of the century
for that industry, wasn't it? It really was.
You had Stelios with EasyJet, Michael O 'Leary
with Ryanair. They came in with a completely
radically different model. No frills, no free
meals, no assigned seats initially, just rock
bottom, unbelievably low prices. And they were
selling seat only. That was the key, right? That's
the absolute key. People started realizing, wait
a minute, the Internet exists now. to go to a
travel agent on the high street and buy a package.
I can book a $29 room flight to Nice on this
new orange airline and I can go on another website
and book my own hotel. And Monarch was sitting
there with its crown service and its free hot
meals looking, well, suddenly looking quite old
fashioned and expensive. They were caught completely
in the middle. They were too expensive to be
a low -cost airline. But they weren't premium
enough to be British Airways. They were the classic
squeezed middle. Did they try to compete in other
areas? They did. They introduced wide -body aircraft
like the Airbus A300 and later the A330s for
their long -haul routes, which was smart. The
budget guys couldn't reach Florida or the Caribbean
yet. But on the short haul, the bread and butter
runs to Spain and Portugal. They were under siege.
So how did they react to this existential threat?
Did they just ignore it and hope it would go
away? For a while, maybe. But they couldn't ignore
it forever. Eventually, they had to pivot. And
in 2004, they made a really drastic decision.
They abandoned the charter -only model almost
entirely and adopted what they called a modified
low -cost model. Modified is one of those words
that makes me nervous in a business plan. It
sounds like a compromise. It was a huge compromise.
They were trying to have their cake and eat it,
too. They started charging for food and drink,
just like the budget carriers. But they tried
to keep some of the old frills to try and differentiate
themselves. Like what? Well, back in the late
90s, they had a service called Monarch Plus.
For an extra fee, you could get pre -booked seats,
and I'm not making this up, duck breast, in -flight.
Meals. Duck breast. On a flight to Majorca. For
a 30 pound supplement, yes. They were trying
to be low cost luxury. But the problem is if
I'm looking for a cheap flight, the last thing
I want is a 30 pound duck breast. I want a 10
pound saving on the ticket price. True. By 2004,
they were chasing that low fare market aggressively,
but they had all the legacy costs of a traditional
airline, older staff on better contracts, a proper
pension scheme, a more complex older fleet. EasyJet
didn't have any of that baggage. And this air.
the mid -2000s, this is where things start to
get a... It feels like they were having a complete
identity crisis. They seemed to be throwing absolutely
everything at the wall just to see what would
stick. Culturally, they were trying very, very
hard to be cool. Oh, the pop culture phase. This
is fascinating to look back on. In 2007, they
did a partnership with the club brand Head Condi.
No way, the CD compilation people. The ones with
the sort of Art Deco cartoon girls on the cover?
They're very same. They painted entire planes
with special Fly Condi livery. Massive billboard
titles like Umi and Ibiza on the side of the
fuselage. They were running party flights to
Ibiza. What did that even entail? Selling head
condi CDs on board, blasting house music during
boarding. It was a whole vibe. I mean, I guess
you have to know your audience, right? If you're
a group of 20 -somethings going to Ibiza, that's
probably quite cool. But if you're a family of
four going to Menorca for a quiet week. Do you
really want a nightclub vibe at 30 ,000 feet?
Probably not. It certainly grabbed headlines,
though. But then, in 2008, we reached peak absurdity.
We absolutely have to talk about Celebear. Oh,
God. Please tell me this is exactly what I think
it is. It was an ITV2 reality show. Monarch allowed
a production company to take over an entire Airbus
A321. And they had a roster of celebrities working
as cabin crew. And when we say celebrities. We
are using the term in its loosest possible sense.
We're talking about Lisa Mafia from Solid Crew.
Chico from X Factor. It's Chico time. Exactly.
Imagine you've paid good money for your holiday.
You're tired. You just want a gin and tonic.
and to be left alone. And suddenly Chico is doing
the safety demonstration and struggling to push
the drinks trolley down the aisle on an actual
fair paying flight. That is just incredible.
It feels desperate. It shows a company that knows
it can't beat Ryanair on price. So they're trying
to beat them on celebrity vibes. Vibes and visibility.
They were just desperate for differentiation.
But to give them some credit, they were also
quite tech forward in some ways. In 2007, they
became the first European airline to accept PayPal
for bookings. That was actually quite progressive
for the time. They were trying to reach a younger
online audience. But despite the duck breast,
the house music and Chico, the financials were
starting to tell a very different and much darker
story. The fun and games were just masking a
rot that was setting in. Right. We move into
the 2010s, and the storm clouds are properly
gathering now. 2009 is the real turning point.
The world financial crisis has just happened,
of course. And Monarch felt it badly. After years
of pretty consistent profit, they posted a massive
$32 .3 million in 2009. That is a huge, huge
hole in the balance sheet for an airline of that
size. Ouch. How did they plug that hole? The
Mentegaza family stepped in again. They injected
$45 million of their own money to save it. It
was a lifeline. But you can imagine the conversations
at the family dinner table in Switzerland were
probably getting quite tense. I bet. And did
they change strategy after that? Or just burn
through the money doing the same thing? They
tried to change. They formally rebranded to become
a scheduled leisure airline. They announced they
wanted 80 % of their business to be scheduled
flights, moving even further away from those
charter routes. They came up with a new slogan,
fly your way every day. Sounds a bit generic,
to be honest. It was. They tried to compete with
the hated hidden fees of the budget airlines.
They introduced a flat 10 pound fee for using
a credit card, whereas others were charging percentages,
which could be more. They were really trying
to position themselves as the nice, low -cost
airline. But as we know... Nice doesn't always
pay the bills in that industry. No, because in
2011, just two years after that first bailout,
they lost another 45 million pounds. So the entire
cash injection from the family is gone, just
evaporated. Exactly. And the causes this time
were largely external, which is part of the tragedy
of the story. High jet fuel prices were crushing
everyone, but also political turmoil in the Middle
East, the Arab Spring. Why was the Arab Spring
so specifically damaging for Monarch? Because
Monarch had expanded heavily into destinations
like Egypt, particularly Sharm el -Sheikh and
Tunisia and Turkey, These were high margin destinations
for them. Well, they were a bit further away,
so the tickets were more expensive. But the hotels
and ground costs were very cheap. It was a great
value proposition for Brits looking for winter
sun. But when the Arab Spring hit and you had
riots and political instability plastered all
over the news, tourists just stopped going. Right.
You don't take your kids on holiday to a potential
conflict zone. Precisely. So their most profitable
routes basically dried up overnight. They needed
another rescue package. This time it was $75
million. But the writing was really on the wall
for the original owners. The Mantegazza family
had finally had enough. After all that time.
It seems so. They had supported the airline for
nearly 50 years, but they weren't willing to
keep pouring good money after bad into what was
becoming a black hole. In 2014, the airline was
sold. And the terms of that sale tell you everything
you need to know about the desperate state the
company was in. How much did it sell for? It
was sold to a private investment firm called
Greybull Capital. And the price was nominal.
It was almost certainly one pound. One pound.
A 50 -year -old airline. Dozens of jets, thousands
of staff, a household name, sold for a coin you
find down the back of the sofa. And the deal
happened just hours before its air operator certificate,
its license to fly, was due to expire. It was
that close to the edge, even back in 2014. So
Gray Bull Capital takes over. Now, these guys
are turnaround specialists, right? They aren't
hoteliers with a passion for aviation like the
men to Gaza's. They are hard -nosed money guys.
What was their plan? Slash and burn. Or restructuring,
if you want the polite corporate term. They looked
at the books and said, this long haul stuff,
it's too expensive, too complex. By April 2015,
they had seized all long haul and charter operations
completely. Wow. So no more flights to Orlando.
No more charters for Cosmos. Gone. The link with
their old parent company was finally severed.
They stripped it all back to become a pure, lean,
short -haul, low -cost carrier. They got rid
of the wide -body Airbus planes and focused just
on the A320s and A321s, just European holidays.
And what about the staff? Big redundancies. And
the remaining staff were forced to take significant
pay cuts and accept worse conditions to save
their jobs. It sounds like a desperate, last
-ditch attempt to streamline. If we just make
ourselves look exactly like EasyJet, maybe, just
maybe. We can survive. That was the bet. But
then we hit the period of 2015 to 2017. And this
is where that perfect storm analogy really, truly
holds up. You can have a bad strategy or you
can have bad luck. In its final years, Monarch
had both in spades. What happened next? First,
a wave of terrorism that directly hit their core
markets. We had the tragic beach attack in Tunisia.
We had the bombing of their Russian airliner
over Sharm el -Sheikh in Egypt. I remember that.
The UK government banned all flights to Sharm
as a result. Exactly. That was one of Monarch's
biggest and most profitable winter sun earners.
Gone. Wiped off the map. Then you had the attempted
military coup in Turkey, another massive market
for them, completely destabilized. So all the
places where they actually made good money were
suddenly off limits. Everyone just piled into
Spain instead. Yes, but everyone else was flying
to Spain too. Ryanair, EasyJet, Jet2. The competition
there was absolutely ferocious, so the profit
margins were tiny. They were fighting for scraps.
And then in June 2016, the knockout blow, Brexit.
The vote to leave the European Union. Now, putting
all the politics aside, strictly from a business
perspective, how did that hit an airline like
Monarch? Currency. It is all about currency.
Airlines are in a uniquely dangerous position.
They pay for their two biggest cost fuel and
aircraft leases in U .S. dollars. That's the
global standard. But Monarch earned almost all
of its revenue in British pounds from U .K. holidaymakers.
And the pound absolutely crashed against the
dollar after the vote. It plummeted. It fell
off a cliff. So suddenly, every single gallon
of fuel they bought and every monthly lease payment
on their planes became significantly more expensive
overnight. But their revenue stayed exactly the
same because they couldn't just ask passengers
for more money for tickets they'd already booked.
It just created this. massive unfillable hole
in the balance sheet. A black hole. Yeah. So
we get to late 2016. I remember seeing tweets
about it at the time. There were rumors flying
around. September 2016. Rumors of an imminent
bankruptcy started swirling on social media.
The Civil Aviation Authority, the CAA, was so
worried they secretly started booking what they
called shadow airlines. Shadow airlines. That
sounds like something out of a spy movie. What
does that actually mean? It means the CAA knew
that if Monarch collapsed, they'd have over 100
,000 people stranded abroad. So they quietly
started paying other Airlines United, Air Transat,
a whole range of charter carriers to fly empty
planes to European holiday airports and just
park them there on standby just in case. Wow.
They spent millions of pounds just positioning
these assets to be ready for a rescue that hadn't
even happened yet. But Monarch survived that
scare in 2016. By the absolute skin of their
teeth. They got 165 million investment at the
very last minute. Now, at the time, everyone
thought this was Grebel putting more money in.
But it was later revealed in the insolvency reports
that the vast majority of that money actually
came from Boeing. Boeing. The aircraft manufacturer.
Why on earth would Boeing bail out a struggling
UK holiday airline? Because Monarch had a massive
order on the books for 30 brand new Boeing 737
MX aircraft. Boeing wanted to keep their customer
alive long enough to take delivery of those planes
and pay for them. It was basically a vendor financing
deal designed to keep their own order book intact.
That is a detail I did not know. So Boeing was
effectively propping them up just to sell them
new planes they probably couldn't afford anyway.
Essentially. Yes, it was a lifeline born of self
-interest, but it only bought them one more year.
We moved to September 2017. The Atoll license
is up for renewal again. And this time there's
no white knight, no Boeing, no Grable, no last
minute savior. No, the losses were just too big.
On September 30th, the CAA granted Monarch a
license extension, but only for 24 hours. That
is the death knell, isn't it? A 24 -hour license
isn't a license to operate. It's a license to
tidy your desk and turn out the lights. It is.
And in those final desperate days, Monarch did
something quite controversial and actually quite
telling. They tripled their fares. I heard about
this. Why would they do that? If you're about
to go bust, why would you triple the prices?
Were they trying to gouge one last bit of profit?
It was actually the exact opposite. It was a
deliberate attempt to price themselves out of
the market. They didn't want to take any more
bookings because the directors knew legally that
they probably couldn't fulfill them. I see. If
they took money from customers knowing they were
about to go bust, that could be considered fraud.
So by making the tickets ridiculously transparently
expensive, they discouraged anyone from booking
without... having to technically close the shop.
It was a quiet signal to the world, don't buy
this. And meanwhile, behind the scenes, the CAA
is assembling the rescue fleet again. The shadow
fleet. And this time it was for real. The scale
of it was unprecedented. They lined up 38 aircraft
from 15 different operators. We're talking Qatar
Airways, Air Transat, Titan Airways. The Qatar
Airways. They had Qatar Airways wide -body jets
like A330s parked at British airports just waiting
for the signal to go. That must have been a surreal
sight for the plane spotters, seeing a huge...
premium Qatar Airways jet at a regional UK airport,
getting ready to pick up tourists coming back
from Spain. It all came to a head on the night
of October 1st, going into October 2nd, 2017.
The day it all stops. Late that night, flights
that were due to depart, like one to Ibiza, were
canceled right at the boarding gate. Can you
just imagine standing there, boarding pass in
your hand, you can see the plane on the tarmac,
and the screen just goes blank and says canceled.
Utterly devastating. The final flight to ever
operate under a monarch call sign was ZB 3785
coming in from Tel Aviv to Manchester. It landed
at 03 .19 British summertime. Less than an hour
later, at 4 a .m., the administration was formally
announced. Lights out. Immediate cessation of
all operations. 110 ,000 people abroad. 300 ,000
future bookings canceled. The 50 -year -old brand
was dead. And so began the aftermath, the enormous
cleanup operation. They called it Operation Matterhorn,
the repatriation operation. It cost the public
purse $60 million. Who pays for that? Is that
the taxpayer? Not directly, no. It's paid for
by the Air Travel Trust Fund, which is funded
by that little £2 .50 atoll protection contribution
you see on your invoice when you book a package
holiday. That fund paid for this massive operation,
chartering everything from Boeing 737s all the
way up to 747 jumbo jets to ferry people home
over two weeks. It was the UK's biggest peacetime
repatriation, wasn't it? At least until Thomas
Cook happened two years later. Correct. In many
ways, Monarch was the dress rehearsal for the
Thomas Cook collapse. It taught the CAA and the
government how to handle a failure of that magnitude.
Before we wrap up the timeline and look at the
legacy, I want to touch on something from the
source material, the serious detail, safety incidents.
Because while Monarch had a generally good safety
record over 50 years, there were a couple of
moments that really stand out in the report,
and they explain some fascinating technical things
about aviation. Yes, and these are important
for the real aviation geeks listening. was back
in 1985, an incident with aircraft GMOND. It
was a Boeing 757, one of their new ones, flying
from Tenerife to Luton. What happened? Over Portugal,
passengers heard two loud explosions. Smoke started
filling the cabin. The aircraft lost a significant
amount of its electrical power. That is the absolute
nightmare scenario. Smoke in the cockpit, smoke
in the cabin. They made a successful emergency
landing in Porto. And the cause was just bizarre.
It was leaking lavatory fluid. The blue toilet
water. The fluid, yeah. Leaking inside the fuselage,
not frozen on the outside. It dripped down onto
a bundle of electrical wiring. Now, here is the
really technical part. The wiring insulation
back then was a material called Kapton. When
this fluid hit it, it caused something called
arc tracking. Which is? Basically, the electricity
jumps between the wires and burns along the insulation
like a fuse, creating intense heat and smoke.
It was the first known major captain -related
problem on a British jet. It led to major changes
in how aircraft wiring is insulated and protected.
And the other incident. 2002. Gibraltar. Aircraft
G. M -O -N -C. Now, have you ever flown into
Gibraltar? I haven't, but I've seen the videos.
Yeah. The runway that crosses the main road.
You've got the giant rock on one side and the
ocean on the other. It is a notoriously difficult
and dangerous airport. The rock causes massive,
unpredictable wind shear. The captain on this
flight used an incorrect landing technique to
try and fight that wind. He applied full nose
down elevator just before touchdown. Basically,
he pitched the nose down far too hard. Far too
fast. He slammed it onto the runway. He slammed
it down so hard that the fuselage, the actual
metal skin of the plane, buckled. It creased.
The structural damage was so severe the plane
was written off. But they landed safely. They
landed. No fatalities. But it was a stark reminder
of the incredibly thin margins of air in aviation.
If he had pushed just a little bit harder, the
aircraft could well have broken apart on the
runway. So we look back at Monarch now. It's
been a few years. The dust has well and truly
settled. What is the final legacy? It's complex,
isn't it? On the one hand, you have the deeply
human element. 2 ,300 employees lost their jobs
that morning in 2017. Many of them found out
via text message or by seeing it on the news.
These were generations of families who had worked
for the airline. And millions, literally millions
of people who took their first ever flight, their
first foreign holiday on a monarch plane with
that gold and purple crown on the tail. Exactly.
They were a genuine pioneer. They moved from
turboprops to jets, from charters to scheduled
flights. They democratized the Spanish holiday
for the British public. But on the other hand.
They simply couldn't pit it fast enough at the
end of the day. They were a legacy company trying
to play a startup's game. They had high legacy
costs, a big pension deficit and an aging fleet.
And they were trying to fight these lean, mean,
non -unionized machines like Ryanair and EasyJet.
And when you add that toxic cocktail of terrorism
and the Brexit currency crash to that already
fragile mix. It was just insurmountable. The
margins in this industry are razor, razor thin.
We are talking pennies on the pound profit per
passenger. You need pretty much everything to
go right all the time. For Monarch in those final
two years. Literally everything went wrong all
at once. It really makes you think about the
fragility of it all, doesn't it? We assume these
huge 50 -year -old brands are permanent fixtures,
but they rely on such a specific set of conditions.
People feeling safe enough to travel and their
money being worth enough to spend. Exactly that.
Monarch's entire business model relied on confidence.
When the fear of terrorism met the falling pound,
that confidence shattered and the business model
just... It was too fragile to survive. And with
Thomas Cook following them into oblivion not
long after, does the monarch's story really mark
the definitive end of that traditional British
holiday company? That is the big provocative
question, isn't it? The old model of we do it
all for you, the package deal. It has largely
been replaced by do it yourself on an app. Monarch
was the bridge between those two worlds, and
eventually the weight of the new world just became
too much, and the bridge collapsed. A sobering
thought for the next time we're all clicking
book on a cheap flight. Thank you for walking
us through that. It's an incredible piece of
British industrial history. My pleasure. It's
a fascinating story. And thank you for listening
to this deep dive into Monarch Airlines. We will
catch you on the next one. Safe travels.