HOT STORIES NEWS YOU NEED TO KNOW THIS WEEK
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This week’s top stories: 1. Monarch ‘to challenge’ 2. Action on route safety 3. Malaysia MH17 tragedy 4. Cruise Village switches 5. Visa to levy fraud fee
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Monarch tipped to rival no-frills giants despite ‘£60m fund call’
Lee Hayhurst
Monarch Airlines has been tipped as one of the carriers to rival easyJet and Ryanair’s low-cost duopoly in Europe, despite claims it is seeking a £60 million refinancing from its billionaire owners. The Monarch Group declined to comment on a report claiming it was in talks over another multimillion-pound cash injection from the Mantegazza family that would be its third since 2009. The refinancing speculation was
linked to Monarch’s £1.75 billion aircraft order announced last week and reports of weak trading in the short-haul leisure travel sector in the UK. It also came days after “fast-growing” Monarch was cited as a potential threat to the no-frills carriers and to the big two charter operators Thomas Cook and Tui Travel in a report by finance giant HSBC. Quoting a Travel Weekly report from July 3, the HSBC study noted the high level of late-season advertising, saying this was a “clear sign” the market was underperforming. With intra-Europe aviation capacity
up 6.2% this summer, HSBC described the low-cost carrier market as
travelweekly.co.uk — 24 July 2014
“increasingly challenging”. It said the short-haul sector was facing structural change in the face of “failing capacity discipline” and soft selling prices. Among the low-cost carriers, only easyJet saw yield growth in all four quarters in 2013; Air Berlin saw significant double-digit second-half decline and Ryanair a 10% fall in the third quarter. In this environment of weakening yields, HSBC said second-tier carriers such as
Jet2.com, Monarch and Norwegian have emerged. “In their local markets
Jet2.com [northern England] and Monarch [southern England] are both growing fast, while Wizz continues to grow fast from eastern Europe,” the report said. However, HSBC foresees a “new
surge in competition from Ryanair and easyJet” and questions whether Cook and Tui are strong enough to also withstand the threat from Monarch,
Jet2.com and Norwegian. The big two are due to give third-
quarter trading updates next week. HSBC said weaker UK trading “seems to be more than priced in” to Cook’s share price, which has fallen 30% since mid-May.
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