Monarch Airlines collapse: MPs hit out at British Steel-style dumping of pension scheme

Oliver Gill
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Monarch's pension scheme fell into the PPF using a similar mechanism recently used for British Steel's retirement scheme (Source: Getty)

An influential group of MPs has hit out at a multi-million-pound deal between the owners of doomed airline Monarch and the UK’s pension lifeboat.

Work and Pension select committee chair Frank Field today criticised a deal in which Greybull Capital jettisoned a £158m pension deficit into the Pension Protection Fund (PPF) while picking up the airline for £1.

The deal was forced through using the same arrangement recently applied to ditch British Steel’s £15bn pension scheme.

But the PPF retaliated to Field's comments, saying Monarch's pensioners have received "much more than the pension scheme could have afforded to pay".

"The expected recovery for the pension scheme if Monarch had gone bust in November 2014 was £0," said PPF director of restructuring and insolvency Malcolm Weir.

The £30m in cash secured for the scheme by the restructuring of Monarch was much more than the scheme would have otherwise received. The restructuring met the PPF’s published tests.

Read more: MPs mull probe into Monarch collapse as union calls for investigation

Mitigation payment

In October 2014, Greybull made a £30m mitigation payment to the PPF, gave the fund a 10 per cent share of Monarch and issued the lifeboat a £7.5m loan note.

Recent reports suggest Greybull has been able to recoup the majority of the £250m it poured in over its three years of ownership as a result of the complex nature it funded the airline.

Other reports have suggested Greybull – a private firm run by Marc and Nathaniel Meyohas and Richard Perlhagen – could even extract a multi-million pound profit from its investment.

Field said:

How can it be that once again, mega-rich individuals could walk away from a collapsed company with a bumper profit while ordinary people pick up the bill?

Read more: A fifth of Monarch passengers have been flown back to the UK

Five questions

The Labour MP has posed five questions to PPF chief executive Alan Rubenstein. Field wants to know if any of the £7.5m loan has been paid, where it ranks compared with Monarch’s other debts and how the PPF intends to secure any monies outstanding.

Field also queries the 2014 deal as well as asking whether the mechanism used by Greybull to buy Monarch “compromised the interests of the PPF”.

Field continued: “This massively supports the case for the law to change, to robustly protect pension schemes against owners seeking to line their pockets while avoiding their responsibilities, in line with our recommendations. Do we need another illustration of the ethics of some of the billionaire class in this country before we act?”

Read more: Monarch dethroned: Rival budget airlines’ shares take off as firm collapses

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