Leadership Insights from Monarch CEO

Andrew Swaffield CEO of Monarch Airlines has successfully transformed the business returning the airline to profitability.  Last week Andrew spoke at the Aviation Club lunch. Transforming and restructuring an airline has to be one of the toughest jobs for any CEO. I asked Andrew what qualities you need and what advice he would give to those with the task of business turnaround. Firstly he said ‘Do your due diligence on the Head Hunter brief!’ He admitted that he was not fully aware of the problems the group was having, nor the potential for the then owners to decide to sell.

Andrew’s insights on leadership were refreshing. He believes that openness, honesty, trust and good communication are really important. He read as many direct e mails as possible from employees rather than relying on information from intermediaries. This is indeed important. Many companies use external consultants to support their change plans. However, it is vital for the leadership team drive the process and maintain responsibility for the tough decisions and difficult conversations. Otherwise employee trust will dissipate. Andrew also commented about the importance of stakeholder relationships and noted how supportive the unions BALPA and UNITE had been in the process.

When Andrew joined Monarch in 2014 “it looked as if the UK’s oldest airline brand may be about to land for the last time”. Now Monarch is profitable having been streamlined into a low cost scheduled European carrier. The airline took £200m permanently out of costs, losing 700 colleagues with those who stayed voting overwhelmingly for 30% pay cuts and modernised terms and conditions. A £158m pension deficit was moved into the Pension Protection Fund, charter flying was ended, 10 aircraft were sent back including the airline’s long haul fleet of 2, and new owners Greybull Capital were found.

Andrew joined Monarch from IAG where he had spent 20 years in various roles.  He said he was attracted to the airline because of its reputation for great service, a great brand, excellent staff and a strong and loyal customer base.  ‘”They were the reason that the company was worth saving. They are hard to build –as hard as it is to do, it is much easier to restructure and cut costs, and rationalise a fleet than it is to build a brand, change a culture and gain customer loyalty”. Having worked with Andrew at BA in the early 90’s, I know him to be marketing and people led. All too often restructure is driven purely by the bottom line and the harder to measure top line cultural and brand values are neglected.

Monarch moved from a loss in 2014 of £94m to reporting £40m of underlying profits in 2015. Andrew said “I am pleased to say that we are on track to deliver a similar number this year, despite the challenges of terrorism and closed markets”.  He said that they had benefitted from low fuel prices by unwinding their hedging positions. The airline had also faced many unexpected headwinds – the closure of Tunisia and Sharm El-Sheikh, the migrant crisis dampening Greek bookings, bombs in Turkey reducing traffic by 60% and the Paris and Brussels attacks which dampened consumers desire to travel overseas for some weeks. He said “For us to be delivering a sustainable return to decent profitability in this environment would not have been possible without the depth of restructuring that we carried out in 2014, and I am pleased to have built a cost base that could prosper with fuel at more than twice the current price”.
Monarch have placed an order for 30 firm Boeing 737 Max 8 new generation aircraft, and 15 firm options, which mean that by 2020 our average fleet age will have fallen from 12 to 2 years, and  fuel efficiency will have improved by 14% whilst delivering a 40% smaller noise footprint.

To conclude Andrew stated “We have now set what we call our True North, which is our unchanging goal for the long term to  be Europe’s most recommended airline group, as measured by customers”.

“Our new owners, Greybull, have helped us greatly with our transformation plan and major new investment”. Greybull are very much in the news as they are in the final stages of discussions to take over Tata Steel’s plants in Scunthorpe and elsewhere, with plans to rebrand them as British Steel.  An organization that has saved a strong British airline brand and wants to save the British steel industry surely is worthy of high commendation. So too are Andrew Swaffield’s achievements in transforming Monarch against very tough odds. He’s also modest as he described himself as a ‘lucky general’!

The Leadership and Talent Challenge in Transport – Insights from C Suite Leaders

I recently facilitated an event with 15 Transport Sector CEO’s and Directors to discuss current leadership and talent challenges in the sector. So what important themes came up in our discussion? From Aviation to Rail to Marine, today’s leaders of Transport Operators face immense challenges. Increasing customer demands, safety and security issues, infrastructure pressures, competition, regulation, and skill shortages, all mean that leadership and talent are central to driving success.

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How do Chief Executives handle a new job?

Peter Dunkin has recently interviewed some leading Chief Executives, and has coached many senior people into new jobs. He shares unique insights from the CEO’s of British Airways, EADS (Airbus) and others. Five leadership priorities have emerged on the crucial first 100 days in a new role. To find out more read the full article published in this month’s Airline Business and Flight Global magazine.

TO FLY TO SERVE!

BA’s new CEO Keith Williams told me last week that he is delighted with the progress of the airline’s new advertising campaign. At least two very positive events have happened since Keith took over as CEO – the ending of the long standing BA Cabin Crew dispute and the launch of an impressive new promotional campaign. The TV commercial focuses on brand reassurance and BA’s 90 year heritage. Competitor reaction can be a sign of a campaign’s effectiveness. Easyjet responded with a take off (excuse the pun) of the BA advert ‘To Fly to Save’. Things don’t change. BA’s strapline in the 1980’s “We’ll take more care of you” was quickly rebranded by rivals as “We’ll take more fare off you!”. Virgin have also launched an impressive and very different commercial. It features cabin staff pole dancing around oversized forks topped with juicy prawns. The BA and Virgin adverts do, however, have something in common. They revere, almost idolise, their staff especially their pilots and cabin crew. Images of passengers are merely incidental. With a history of industrial issues, it is wise for airlines to show their staff that they are valued. With a backdrop of relentless cost cutting and price driven activity, it is also encouraging to see our leading airlines investing in brand value.

Airline Mergers – Business Travel Magazine

The Business Travel Magazine March 2011

There are few industries more challenging than civil aviation. Fierce competition, overcapacity, low yields, volatile fuel prices and susceptibility to external events such as terrorism, ash and snow are all among the obstacles to success. The situation is not helped by some airlines growing too quickly, seduced by the vanity of volume, ahead of the sanity of profitability. This has forced the need for consolidation. In reality, the immediate drivers behind consolidation have been about survival, cutting costs and shareholder value. According to IATA, the industry lost over $50billion in the last decade with over 100 airlines going bust in Europe alone.

Read the full article here >>

Airline Pricing – Business Travel Magazine

Airline Pricing Business Travel Magazine Jan 09

For 2009, I propose a New Year’s resolution for airlines to ‘be more responsible about pricing’ and ‘add value’ back into the business. Running an airline is a hugely expensive, high risk and complex business. Aircraft, fuel prices, airport charges and security costs are increasingly high and volatile, and airlines have enormous responsibility for safety and the environment.

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