Monarch Airlines is eyeing up a number of struggling European rivals as its owners weigh ambitious growth plans for the low-cost carrier.
It is understood the airline has shortlisted a handful of potential takeover candidates on the Continent, as part of a wide-ranging strategic review undertaken by Greybull, the investment firm that saved it from collapse less than two years ago.
City sources said Monarch has looked at Air Berlin, TuiFly, and Thomas Cook Airlines, as well as a budget airline in Spain, as possible bid targets.
Greybull is assessing several different options as part of its review of Monarch, from potential acquisitions to mergers, as well as a potential sale to a bigger player. Greybull rescued Monarch from certain bankruptcy in the summer of 2014. The airline was just hours away from being declared insolvent, which would have left tens of thousands of holidaymakers stranded around the world.
Under Greybull it has quickly returned to profit following a severe cost-cutting programme. The firm, which has just announced a high-profile rescue of Scunthorpe steelworks, has hired Deutsche Bank to oversee the process.
Europe’s low-cost airline market is ripe for consolidation. Many carriers that entered the market have struggled to compete with the more established players such as Ryanair and easyJet.
German carrier Air Berlin, which is part-owned by Gulf airline Etihad, is desperately trying to rein in costs as part of a major restructuring. Managers and pilots of Air Berlin have agreed to pay cuts as part of a restructuring.
Analysts have also speculated if tour operators such as Tui and Thomas Cook, which have also struggled in the face of soaring online competition, can afford to hold on to costly airlines.
Last week, Sky News reported that Monarch had attracted the interest of Chinese conglomerate HNA, which also owns Swissport, the ground-handling services business. A Greybull spokesman said: “Monarch has executed a successful turnaround, is now a strong and stable business, and is therefore ready to look at growth opportunities in Europe. “
“In order to review relevant options thoroughly, Monarch has sought the assistance of Deutsche Bank, who will look at both inbound and outbound opportunities.”