Collapsed airline Monarch has lost a High Court battle over ‘valuable’ runway slots it wants to exchange with other carriers to raise cash for creditors.
Jet2, Norwegian Air Shuttle, IAG, Wizz Air and easyJet are all understood to be vying for the slots, which span Manchester, Gatwick, Birmingham, Luton and Leeds Bradford airports.
Two judges in London gave a decision today on a judicial review application by the ill-fated carrier, which went into administration on October 2.
The ill-fated carrier Monarch Airlines went into administration last month on October 2
The collapse of Monarch, which was owned by private equity firm Greybull Capital, led to 1,858 workers being made redundant and the flights and holidays of about 860,000 people being cancelled.
Lord Justice Gross and Mr Justice Lewis heard that the application by claimant Monarch Airlines Ltd (MAL) against Airport Coordination Ltd concerned MAL’s entitlement to receive certain slots.
Bankim Thanki QC, for the airline’s administrators, explained that if received ‘MAL’s portfolio of slots would represent MAL’s most valuable asset’.
He added: ‘MAL would therefore seek to exchange those slots with other air carriers in order to realise value for its creditors.’
At the heart of the action was a decision by Airport Coordination Ltd (ACL) not to allocate certain take-off and landing slots to the airline for the summer 2018 season.
Mr Thanki told the court that it was accepted by ACL that ‘Monarch would have been entitled to receive the slots in issue but for going into administration’.
The collapse of Monarch, which was owned by Greybull Capital, led to 1,858 workers being made redundant and the flights and holidays of about 860,000 people being cancelled
He argued that the approach taken by ACL in relation to what should happen to the slots was ‘unlawful’.
The QC told the judges: ‘ACL has no lawful power to refuse to allocate these slots or to ‘reserve’ them pending determination of proposals to revoke or suspend MAL’s operating licence.’
It was of no relevance, he said, that MAL’s purpose in seeking the slots ‘is to exchange them with another airline for valuable consideration’.
The judges heard that the risk of loss of value ‘increases the longer allocation is delayed’ and after November 20 ‘there is a risk of a significant loss of value’.
But the judges rejected Monarch’s claim that ACL was under a duty to allocate the summer 2018 slots to Monarch ‘by reason of historical precedence’.
Lord Justice Gross said: ‘Whatever flexibility and discretion ACL enjoys in other circumstances to reserve (or postpone) a decision, it is no longer entitled to reserve its decision on the summer 2018 slots on the facts of this case.
A Monarch plane lands at London Gatwick Airport on October 1, just a day before it went bust
‘That would be to sterilise or distort part of the market, to the potential detriment of third parties, for an uncertain period of time.’
The judge announced: ‘Accordingly, the consequence of our decision is that the summer 2018 slots are to be placed in the slot pool.’
The administrators are seeking permission to appeal and urging the judges to ‘stay’ their order pending any appeal.
A Greybull spokesman said: ‘The legal case deals with novel and complex issues. In practice this is a matter for KPMG acting as administrators to manage. Greybull can do little more than await the outcome of the administration process.’
The judges adjourned a decision on whether to grant Monarch permission to appeal until they give a full judgment on the action on a date to be fixed. Today, they only announced their decision with brief reasons.
They refused a ‘stay’ on their order in respect of Manchester and Birmingham airports, but granted one in relation to Gatwick and Luton until November 17, or until further order.
Blair Nimmo, partner at KPMG and joint administrator, said: ‘We are disappointed with today’s ruling and will be seeking leave to appeal as a matter of urgency.’