in Aerospace

MAEL goes into administration

Posted 8 January 2019 · Add Comment

Monarch Aircraft Engineering Limited (MAEL) - established in 1967 and based at London Luton Airport - has gone into administration.



In 2017 MAEL was celebrating 50 years since its foundation on 30th March, 1967, founded a year before the now defunct Monarch Airlines, opening a hangar at Luton Airport in 1968 and commencing jet aircraft maintenance in 1971.

MAEL had line maintenance facilities at Gatwick, Luton, Birmingham, Manchester, Leeds Bradford, Edinburgh, Nice, Malaga, Warsaw and Kiev, all capable of providing line maintenance support of all levels on Airbus, Boeing, Embraer and Bombardier aircraft types.

The company’s base maintenance operation had grown too from Luton to also include a state-of-the-art facility at Birmingham Airport which opened in 2013. Between them, the two hangar facilities were capable of accommodating up to twelve lines of heavy maintenance across Boeing, Airbus, Embraer and Bombardier types.

David Pike, Ben Leith and David Standish of KPMG LLP were formally appointed Joint Administrators of Monarch Aircraft Engineering Limited on Friday 4th January 2019, at the request of the directors. 

MAEL’s fall into administration follows the collapse of the airline Monarch in 2017.

MAEL employs approximately 579 staff across the UK and Europe, providing aircraft maintenance services across four main divisions – base maintenance, line maintenance, fleet technical support (Continuing Airworthiness Management Organisation – CAMO) and a training academy.

The company completed a restructuring in October 2018, following which a number of MAEL’s customers sought alternative suppliers. This presented the business with significant challenges, making it unsustainable in its present form. On 14 December 2018, MAEL therefore announced that it was in talks with potential partners with a view to selling all, or parts of, the business.

Earlier last week, MAEL announced the transfer of the majority of its line maintenance operations to a number of different parties, thereby protecting jobs and ensuring continuity of service for the airlines that use those facilities on a daily basis:

• MAEL’s UK line maintenance operations at Gatwick, Birmingham, East Midlands, Newcastle and Glasgow Airports have largely transferred to Morson Group, with the Luton Airport line maintenance operations transferring to Storm Aviation. Certain Gatwick-based employees have also transferred to Boeing.

• Further operations at Manchester and Birmingham Airports, including related employees, were transferred to Flybe following the cessation of their maintenance contract in late November 2018.

Collectively, these acquisitions ensure continuing employment for 182 of MAEL’s employees.

The base maintenance business undertakes aircraft overhaul and major heavy maintenance programmes from hangers in Luton and Birmingham. This is the activity that suffered most from the loss of key customers following the October 2018 restructuring. Unfortunately, with significant losses being incurred on this activity and with no offer having been received, operations will be suspended immediately, resulting in the redundancy of c.250 employees. The administrators will be seeking a purchaser for the base maintenance facilities and will be working with the small number of base maintenance customers affected by this cessation of trade.

All remaining activities of MAEL continue to trade whilst the administrators seek buyers. These are:

• The CAMO division, which has 27 employees and provides the continuous upkeep of airworthiness records and scheduled maintenance requirements for 33 aircraft across eight customers.

• The training academy, which comprises an engineering training school based out of Luton with a total of seven employees, and an apprenticeship programme with 53 trainees. The administrators are seeking to sell the training school and intend to retain the apprentices for a period while assisting them in finding new apprenticeship placements.

The remaining c.200 MAEL staff are largely Luton based. Regrettably, the majority will be made redundant with 83 employees retained to support the wind down of the business, in addition to those retained in the CAMO and training businesses.

David Pike, Restructuring Partner at KPMG and Joint Administrator, said: “Following the administration of other Monarch entities in 2017, MAEL sought to build its customer base to replace the loss of business from the former airline. Through the insolvency of the airline however, the company inherited significant debts and claims. Every effort has been made to turnaround the business, including launching a CVA which sought to resolve these legacy debts. Unfortunately, following the CVA, a number of customers reduced or sought to terminate their relationship with MAEL, further adversely impacting the business.

“As a result, MAEL recently entered into talks with a number of potential parties with a view to selling all or parts of the business. While it is pleasing agreements with a number of operators have been secured to ensure continuity of service at the majority of MAEL’s line maintenance stations, with only partial offers forthcoming for the rest of the business, the directors have taken the difficult step to appoint administrators.

“We remain hopeful that buyers will be found for the CAMO and training businesses and encourage any interested parties to get in contact.

“We will also be making every effort to provide support to those employees who have been affected by redundancy. As following the failure of the airline, employment fairs will be held in the coming days in Luton and Birmingham, to help these employees secure new roles.”

The trade union Unite said it would be offering its members maximum support and pursing legal action for compensation over a failure to consult after MAEL collapsed into administration last Friday with the loss of 450 jobs at its Luton base.

Describing the news as a ‘terrible blow’ to the Luton economy, Unite, Britain and Ireland’s largest union representing aviation workers, called for an urgent meeting with the administrators KPMG.

Commenting Unite regional officer Paul Bouch said: “This is terrible news and a terrible way to start the new year for a group of highly skilled workers. Unite will be offering our maximum support to help those affected by this announcement.

“Unite will also be seeking an urgent meeting with the administrators KPMG and launching legal action on behalf of our members for compensation over a failure to consult.

“The workers concerned have skills that are in short supply and we would urge other aviation engineering firms to step in to ensure vital engineering knowledge is not lost to industry.

“Over the coming days Unite will be engaging with the buyers of the other parts of the business to ensure that our members’ terms and conditions are protected during the transfer process and that jobs are safeguarded going forward.”
 

Further information can be found on the Administrators’ web page at www.kpmg.co.uk/mael including FAQs.
Should you have any further enquiries email:
mael@kpmg.co.uk

 

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