Seabury Designs a Turnaround Plan to Bring the Airline to Profitability Monarch Achieves ₤200 Million in Reductions of Annual Costs

NEW YORK – October 24, 2014 – Seabury Capital (“Seabury”), a leading global advisory and professional services firm, announced today that it has successfully advised the U.K.-based Monarch Airlines Group (“Monarch” and “the Group”) with respect to the completion of its strategic review and restructuring program. Under the program Monarch has secured ₤125 million of permanent capital and liquidity facilities provided by Greybull Capital LLP (“Greybull”) anchored by a ₤50 million capital commitment, with contributions from the Group’s prior shareholders, principally the Mantegazza family. Greybull also acquired 90% ownership interest in Monarch, with the remaining 10% to be contributed to the Pension Protection Fund (“PPF”).

Greybull is a family office that manages investments in private companies across a diversified range of industry sectors. Greybull will provide significant capital to Monarch in order to grow the Group and build on its long-established heritage and trusted brand name. The sale and recapitalization complete a comprehensive turnaround plan that will help the airline return to profitability and reinvent itself as a low-cost scheduled airline focused on short-haul markets.

“Seabury is very pleased with the successful outcome of this remarkable turnaround effort. We congratulate the Monarch staff and management, and their CEO Andrew Swaffield, for setting such an exciting new course for their airline,” said Seabury Chairman & Chief Executive Officer John E. Luth. “We’re honored to have contributed to this success story through helping our partners at Monarch secure new financing in a challenged market, restructure financial obligations, and design an effective turnaround plan that will ensure future profitability and solid growth in the short-haul market.”

Monarch Group CEO, Andrew Swaffield, said, “I am delighted to welcome the Greybull team as the new owners of the Monarch Group. We have a shared vision for the strategic direction and prospects for the business, and I am looking forward to working with them to implement the exciting plans for building our future. I would like personally to thank all Monarch employees who have been hugely supportive of the initiatives, which were essential to complete this transaction. I am very proud to be leading such a team – together we will be building a great future for the Group.”

“I would also like to thank Seabury for serving as our lead investment banker and restructuring advisor for what was a very difficult turnaround program executed with little time and no margin for errors. Our management team and Seabury worked flawlessly together which shows in the final results of our collective efforts. I have rarely in my career witnessed such commitment and professionalism from an advisory firm and Monarch owes them a great debt of gratitude.”

The main outcomes of Monarch’s strategic review and restructuring, which have led to the successful transaction with Greybull, are:

• Optimize fleet from 42 to 34 aircraft, and revised agreements with lessors to either mark-to-market or early return of 10 aircraft from the current fleet
• Securing a new Boeing fleet order for 30 737 MAX 8 aircraft with deliveries from 2018 to 2020, providing a cost-effective and uniform fleet by late 2020
• Both long-haul and charter flying to end by April 2015
• Airline network to specialize on Monarch’s ‘heartland’ of scheduled short-haul European leisure routes, with increased average frequencies, aircraft utilisation, productivity and profitability
  • Focus on five U.K. airport bases – London Gatwick, Manchester, Birmingham, London Luton and Leeds-Bradford – and closure of East Midlands from summer 2015
• Material concessions agreed with employees across the Group to enable the successful restructuring, including reductions in pay of up to 30%, with more than 90% of unionized staff voting to accept changes, and some 700 redundancies, two-thirds of which were voluntary
• Reduction of the Group’s operating cost base, in line with other low-cost carriers, and increased efficiencies across the business
• Resolution of the Group’s pension deficit through agreement with the Pensions Regulator, PPF and the Trustee of the Monarch Airlines Limited Retirement Benefits Plan which will result in the Plan being assessed for entry into the PPF. The PPF would then hold a 10% stake in the Group, in line with its principles in restructurings such as this. The Pensions Regulator has cleared the restructuring. The pension deficit as per the company’s balance sheet was previously £158 million and the current estimated shortfall to secure full benefits is around £660 million.

ABOUT SEABURY GROUP

Seabury Capital is a leading global advisory and professional services firm that delivers diversified and responsive business solutions to clients in Aviation, Aerospace & Defense, Transportation and related industries. Since 1995, Seabury has partnered with more than 300 clients on over 1,000 engagements to solve their most complex challenges through an integrated approach to consulting, investment banking, principal investment and merchant banking, and data products and software. Our more than 275 professionals worldwide are top-tier bankers, consultants, technology experts and former executives who share a passion for delivering innovative and intuitive solutions geared toward our clients’ diverse and emerging needs. Headquartered in New York, Seabury and its subsidiaries are based in 14 countries on five continents. Seabury served as investment banker and restructuring advisor for 12 of the 20 largest airline turnarounds, including restructuring over $100 billion of debt and lease transactions. www.seaburygroup.com.