UK maintenance provider Monarch Aircraft Engineering (MAEL) has entered administration within days of announcing a partial sale of the business.
More than 400 staff members have immediately been made redundant.
KPMG – which oversaw the insolvency of the MRO provider's former parent, Monarch Airlines, in 2017 – has today been appointed as MAEL's administrator, at the request of the company's directors.
The business has become "unsustainable in its present form", says KPMG, following the loss of several customers after MAEL undertook a restructuring effort in October 2018 in order to reduce "significant debts" inherited from its former parent. Creditors on 9 November agreed to a company voluntary arrangement (CVA) under which MAEL would reduce the £130 million ($164 million) it owed.
MAEL disclosed in December that it was seeking to sell all or part of its business, comprising four divisions – line and base maintenance, continuing airworthiness management organisation (CAMO) services, and technical training.
Buyers have only been found for the line maintenance business, however.
KPMG says that MAEL's line maintenance operations at Birmingham, East Midlands, Glasgow, and London Gatwick airports have "largely" transferred to UK engineering recruitment specialist Morson Group
"Certain Gatwick-based employees have also transferred to Boeing," KPMG adds. Storm Aviation has acquired MAEL's line maintenance operations at Luton airport.
On 3 January, UK regional carrier Flybe told FlightGlobal that it had in late 2018 taken on around 60 staff members from MAEL's line maintenance operations in Birmingham and Manchester, following the termination of a long-standing support contract in November.
These transactions have collectively secured continuing employment for 182 staff members, KPMG says.
It puts MAEL's current workforce at 579, of which 408 staff members will immediately be made redundant.
No offers have been received for the MRO provider's base maintenance operations in Birmingham and Luton, which KPMG describes as "the activity that suffered most from the loss of key customers following the October 2018 restructuring".
It says operations at these sites "will be suspended immediately, resulting in the redundancy of circa 250 employees".
KPMG adds that it will work with a "small number" of remaining base maintenance customers and seek buyers for the facilities.
The CAMO business – supporting 33 aircraft across eight customers, with 27 staff members – and the training school in Luton are set to continue operating, while KPMG seeks potential buyers.
KPMG says it intends to retain the school's current 53 trainees "for a period, while assisting them in finding new apprenticeship placements".
Some 83 MAEL employees are to be kept on temporarily to support the winding down of the business.
Citing the debts MAEL inherited from its former parent, administrator David Pike states: "Every effort has been made to turn around the business, including launching a CVA which sought to resolve these legacy debts. Unfortunately, following the CVA, a number of customers reduced or sought to terminate their relationship with MAEL, further adversely impacting the business."
UK trade union Unite says it will launch legal action for compensation over a "failure to consult" prior to MAEL's entering administration, and has called for a meeting with the administrators.
MAEL is owned by Greybull Capital through its Channel Island-based investment vehicle Petrol Jersey, which bought the MRO provider for just £1 from the administrators of the Monarch Airlines group.
On 11 December, MAEL issued 14,943 in new preferential shares, according to the UK companies register. However, no ownership details for those shares have been disclosed.
Source: Cirium Dashboard