Monarch’s auditor has flagged the viability of the business, warning that there remains a “material uncertainty” about the company’s ability to continue as a going concern, TTG has learned.

Monarch Holdings Limited’s accounts for the year ending October 31, 2014 were released at Companies House last weekend, documenting the full extent of its “annus horribilis” for the first time.

They show that the company made an operating loss before exceptional items of £94 million during this period, although turnover actually increased by 3.5% to £990 million.

The auditor’s report, dated May 20, 2015, also includes an “emphasis of matter” which states that “if reasonably possible reductions in trading occur, [the group] may require additional funding from shareholders if additional external financing cannot be secured”.

It adds: “Although the directors expect that these facilities and additional funding will be provided, the nature of these arrangements indicate the existence of a material uncertainty which may cast significant doubt about the group and company’s ability to continue as a going concern.”

Monarch said it expects to make an operating profit in its current financial year but that if trading deteriorates there is the possibility of “external financing opportunities” and also the support of the ultimate shareholders. Even though the arrangements in place are not “legally binding”, Monarch has a “reasonable expectation” that they will be available for the “foreseeable future” and has therefore continued to “adopt the going concern basis of accounting”.

“Controlling parties”

According to the accounts Monarch’s “controlling party” is the Channel Island-based Petrol Jersey Limited. The controlling parties of this company are: Marc and Nathaniel Meyohas; the Serimnir Fund; and The Oden Trust.

Elsewhere, the accounts reveal that the company benefited to the tune of £160.9 million from the settlement of its pension liability and its transfer to a new company. The total pre-tax loss was £57 million.

Monarch Airlines made a £206.2 million pre-tax loss.

In the accounts, Monarch blamed this on “weak consumer demand and increased capacity in the market” as well as a number of exceptional items.

Airline load factor dropped by 6.5 percentage points to 80.6%, while revenue per seat fell 6.8% to £86.49.

The tour operating division made a profit, albeit a smaller one than in 2013, of £1.7 million.

The accounts additionally show Monarch had to pay out compensation totalling £534,000 for directors’ “loss of office”.

The highest paid director was handed a £385,000 payout and took home a £1.5 million remuneration package, although the accounts do not specify who this was.

Monarch’s financial troubles were well documented last summer with the company’s Atol renewal application going down to the wire.

It was rescued by investment firm Greybull Capital after previous owners the Mantegazza family decided they wanted to sell up.

Monarch’s former chief executive Iain Rawlinson stepped down last July and new boss Andrew Swaffield embarked on an ambitious plan to turn the company into a scheduled low-cost European airline over the summer.

He has had some success, with the company announcing it had cut its losses over the traditionally quiet winter months.

TTG approached Monarch, but the company declined to comment.