The former owner of Monarch has pledged to use part of any profit it makes from the collapsed airline to compensate taxpayers saddled with a £60m bill for flying holidaymakers back to the UK.
Sky News has obtained a letter from Marc Meyohas, a partner at the investment firm Greybull Capital, to the chair of the Transport Select Committee, in which he acknowledges a “moral obligation [if we make a profit]…to defray the costs incurred by the Department for Transport (DfT) in repatriating Monarch customers”.
The letter, obtained from a source in Whitehall, represents the first sign of a formal commitment from Greybull to foot part of the Government’s bill if it ultimately makes a profit from Monarch, which it owned for three years.
DfT insiders confirmed that Greybull had made the pledge verbally to Government officials prior to remarks made by Chris Grayling, the Transport Secretary, at a select committee hearing on 16 October, when he referred to the former shareholder’s “moral obligation”.
:: Redundancies follow Monarch Airlines collapse
Image: Airport staff speak by empty Monarch Airlines check-in desks after the airline ceased trading at Birmingham Airport, Britain October 2, 2017.
Greybull’s letter, dated 24 October, said that the profit-sharing promise “was first discussed in principle with the Secretary of State and his Department several weeks ago”.
“Profit sharing with stakeholders is a long-standing practice that runs through every investment we are involved with, such as our recent announcements to share profit with the employees of British Steel [another Greybull-backed company],” Mr Meyohas said.
It remains unclear whether the investment firm will make a profit from Monarch, with Mr Meyohas’s letter adding that Greybull agreed with Mr Grayling that “it is premature to prejudge the outcome of the administration”.
Any financial contribution from Greybull to the taxpayer’s repatriation bill will ultimately hinge on a dispute over whether KPMG, Monarch’s administrator, has the legal right to sell the airline’s take-off and landing slots to rival carriers.
The slots are worth tens of millions of pounds at current market prices and, if sold by KPMG, would see the proceeds returned to the pot used to pay out to Monarch’s creditors – including Greybull and the PPF.
However, if KPMG loses the case, the slots will be handed out to airlines by Airport Coordination Limited, an independent company.
Image: A Monarch customer service office is closed after the airline ceased trading, at Manchester airport in Britain, October 2, 2017.
That would mean no proceeds being handed to the administrator for distribution to creditors.
Sources say it would also put in jeopardy millions of pounds in potential corporation tax revenues that would otherwise be payable to the Exchequer.
Sources said that a court hearing was being set up within the next week to rule on the issue, which will determine the fate of dozens of slots at airports including Gatwick, Luton and Manchester.
The Civil Aviation Authority co-ordinated an emergency rescue plan to fly more than 100,000 passenger back to the UK when Monarch collapsed into administration at the start of the month.
Greybull had been trying to find a buyer for Monarch’s short-haul network, which had been crippled by a price war and slump in trading, in the days before it failed, amid efforts to persuade the CAA to renew its Air Travel Operator’s Licence.
In his letter, Mr Meyohas mounted a staunch defence of Greybull’s ownership of Monarch and status as the airline’s largest secured creditor.
He said that £250m had been paid to the taxman during its three years as Monarch’s owner, as well as more than £25m to the Air Travel Trust in ATOL fees and bonds.
“The Pension Protection Fund (PPF) has also made it clear that they believe our attempted rescue of Monarch has been beneficial for the pension scheme,” he wrote.
“We honoured in full all the commitments we made to Monarch and, as market conditions deteriorated, went beyond our original commitments on many occasions in order to be a supportive shareholder.”
The financing used to support Monarch, including a complex arrangement with Boeing, “had the full approval of the relevant authorities, including the CAA”, Mr Meyohas added.
Greybull declined to comment on Sunday on its letter to Ms Greenwood.