Monarch Airlines to cut workforce in shift to becoming low-cost carrier

LONDON Mon Aug 18, 2014 7:54am EDT

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LONDON Aug 18 (Reuters) - British holidays airline operator Monarch Group is set to cut the airline's workforce by a third with the closure of its charter operations as it moves to reinvent the carrier as a scheduled European budget airline.

Monarch, privately-owned by the Mantegazza family, said it would scrap its charter flights business to focus on the scheduled European market, repositioning itself as a smaller rival to Europe's biggest low-cost carriers Ryanair and easyJet.

A source familiar with the situation said that Monarch could reduce its staff numbers by around a third, cutting 1,000 jobs, and reduce aircraft numbers to 30 from its current 42 as part of the shake-up plans.

Monarch said last week it aims to complete its transformation to become a scheduled European low-cost carrier by the time a new narrow-bodied aircraft fleet of 30 Boeing 737 MAX 8s start entering service in 2018.

Monarch, based at London Luton airport and with a route offering focused on holiday destinations, ordered the 30 new Boeing jets last month, ditching its current supplier Airbus .

But the company, which promoted its former airlines unit managing director Andrew Swaffield to be new group chief executive in July, said in a statement on Monday that the strategic review initiated by new management and relating to operations, ownership and financing had still not yet been completed.

"That review is ongoing and further announcements will be made upon its conclusion or as otherwise appropriate," it said.

Low-cost airlines are better weathering a European short-haul market where rising capacity is putting pressure on prices than their more traditional rivals. Monarch said last December the environment was tough and would get tougher.

In addition to easyJet and Ryanair, Monarch also competes against low-cost carrier Norwegian, which has expanded at London's Gatwick airport and Spain's Vueling, owned by British Airways parent IAG, amongst others.

It said it would move to scheduled-only flying from summer 2015, with scheduled only flights already accounting for 85 percent of its operations. Its charter operations include some long-haul flights to Florida and the Caribbean as well as to Goa in India, and Gambia.

Monarch Group also operates tour operating and holiday companies under the Cosmos, Avro and somewhere2stay brands, whose flying needs would be met by Monarch services and third party airlines, the company said. (Reporting by Sarah Young; Editing by Greg Mahlich)

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