Monarch has returned to profit in its first full year under new ownership, a year after the airline teetered on the brink of collapse.
After paring back its route network and cutting costs, the group expects to make profits of £40m for the year to 31 October 2015, compared with a £90m loss the year before.
Monarch said cheaper fuel had contributed about £30m to its bottom line, but it had also battled difficulties such as the closure of its Tunisian market following the Sousse hotel shooting and a slump in Greek holidays due to the economic crisis.
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It expects to increase profits next year despite losing millions through the ban on flights to Sharm el-Sheikh during the peak winter season, following the terrorist bombing of a Russian airliner.
The Monarch chief executive, Andrew Swaffield, said: “After all the heavy lifting and the difficult decisions it’s good to see the benefits in the numbers.”
Swaffield said the restructuring, which included 900 redundancies and large pay cuts for most employees, had cut costs by £200m, while revenues had only dropped by £100m on a smaller flying network.
He added: “The restructure is behind us ... obviously we have to be vigilant but we are happy we have a sustainable cost base.”
Swaffield said he expected flights to Sharm el-Sheikh to resume in the new year, although he warned services could yet be suspended beyond the current date of 6 January. Although the region accounts for almost 10% of the group’s revenue, Monarch expects to limit the impact of the crisis in one of its most popular winter sun resorts to “the single-digit millions” with bookings diverted elsewhere.
Monarch has launched services to Tel Aviv and Eilat in Israel, with Tel Aviv “performing extremely positively”. Swaffield added: “Eilat will take a couple of years to build up but we’re confident that market will present a great winter sun opportunity for UK travellers. People are happy to see tight security in Israel. They take comfort from that.”
However, he said he believed Sharm el-Sheikh would rebound: “It will take a year to get back fully, but it will come back quickly. We are very confident that the government are all over the situation and the indications are they will reopen in January. Once the UK government gives us the go-ahead people will rebook with confidence. The longer they leave it closed, the more the infrastructure is going to be affected – you lose staff and supply chains. It will have a big impact on them in Egypt.”
He said Monarch had mitigated the impact on its own business by rescheduling fleet maintenance and parking planes, as well as taking more customers to Israel and the Canary Islands.
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