UK-based maintenance provider Monarch Aircraft Engineering (MAEL) has rejected reports that it is facing a winding-up order, but has said it is working on legacy issues and that its current ownership is not sustainable in the mid- to long-term.
MAEL was the maintenance business of former UK leisure carrier Monarch Airlines, which suspended operations in fall 2017.
On Oct. 5, Sky News reported that MAEL was facing the threat of a possible winding-up petition from UK tax authority HMRC over unpaid tax, forcing the company to put together a financial restructuring deal.
MAEL responded to the report, saying it “is not the subject of a winding up order, or any other form of administration or insolvency process.”
An HMRC spokesman declined to comment on “identifiable individuals or businesses.” He confirmed that HMRC does have the power to issue winding-up petitions to collect debts. “We only initiate winding up action where we believe this is the best way to protect both the interests of other taxpayers and creditors,” he said, replying about HMRC policies, rather than the specific MAEL case.
Monarch Airlines made up more than 50% of MAEL’s revenues, but the engineering division said it has “stabilised operations and transitioned to a stand-alone business,” securing several new contracts, creating 100 new jobs and opening a new component-maintenance facility in Northampton. MAEL employs more than 800 people.
“The company’s maintenance facilities at Luton and Birmingham are now fully utilized and operating at maximum capacity, with contracted work stretching throughout 2019,” MAEL said.
However, Sky News reported that Monarch Airlines subsidiary MAEL is still “saddled with debts” from its parent company and is looking to free itself from those legacy liabilities.
MAEL itself is not in administration, but its parent company is. “The ownership structure, which remains under the administrators of the Monarch Group, is unsustainable in the medium and longer term and a review is now necessary,” MAEL said.
The company added that, together with financial-advisory firm KPMG, it has made good progress towards resolving “legacy issues” and agreeing future ownership structures.
“As part of this process, the MAEL balance sheet will be strengthened and management are confident that the process will be finalised by the end of this month,” MAEL said.