The Monarch Group

Unlocking our potential

Annual Report 2012

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The Monarch Group is the UKs leading
independent travel group, with core activities in
scheduled airline operations, tour operations
and aircraft engineering.
Monarch Holdings Limited (MHL) is the holding
company of The Monarch Group.
Our leading aviation and
travel brands are:
Monarch Airlines
First Aviation
Monarch Aircraft Engineering
Cosmos Holidays
Avro
somewhere2stay
www.monarchholdingslimited.com
Visit our corporate website for
up-to-date information about
The Monarch Group.
You can nd:
Latest news
Group strategy
Vision and values
Our community and corporate
citizenship activities
Company images and videos
Group history
1
The Monarch Group
ANNUAL REPORT 2012
Group revenue m
757.7 2010
757.8 2011
825.1 2012
Group pre-tax and pre-exceptional operating prot/(loss) m
14.1 2010
(51.1) 2011
(14.9) 2012
Highlights
FY12
Increase in Group turnover (net of intra-Group sales) from
757.8 million to 825.1 million.
Group-wide operational like-for-like cost savings of
31.6 million, as planned.
15.7% increase in Monarch Airlines scheduled passenger
volumes (4.6m to 5.3m).
Strong protable growth in Tour Operations sales and yields.
Further protable growth in Monarch Aircraft Engineering
turnover.
20m unique visitors to Group customer online platforms
(up 21% on FY11).
Strengthened leadership and governance with appointments
of Non-Executive and Executive Directors to holding
company Board.
Contents
1 Highlights
2 The Monarch Group at a glance
4 Adapting to a changing industry
and markets
6 Our network
8 From the Executive Chairman
10 Business model
12 Monarch Airlines
16 Tour Operations
20 Monarch Aircraft Engineering
24 Retail and Online
26 Financial review
28 Board of Monarch Holdings Limited
30 Group Management Board
32 Corporate governance
34 The Monarch Foundation
36 Corporate responsibility
40 Independent auditors report
41 Consolidated prot and loss account
42 Consolidated statement of total recognised
gains and losses
43 Consolidated balance sheet
44 Company balance sheet
45 Consolidated cash flow statement
46 Notes to the nancial statements
67 Ofcers and professional advisers
FY12 nancial performance represents good progress towards
the target of consolidated operating protability for all trading
divisions for the year to 31 October 2013.
Three-year nancial performance
2
The Monarch Group
ANNUAL REPORT 2012
Avro somewhere2stay
The Monarch Group at a glance
A unied group of businesses
The Monarch Group is the UKs
leading independent travel group,
with core activities in scheduled
airline operations, tour operations
and aircraft engineering, and a
turnover of 825.1 million for the
12 months ended 31 October 2012.
Group prole
Headquartered at London
Luton Airport
50-year trading history
2,847 employees

Monarch Airlines
Monarch Airlines is a leading UK-based scheduled leisure
airline operating flights from six bases in the UK London
Gatwick, Manchester, Birmingham, East Midlands, Leeds-
Bradford and London Luton airports to leisure destinations
around the Mediterranean and the Canary Islands and to ski
destinations in winter.
Through First Aviation, the flight broking division of the Group, scheduled
airline and traditional charter capacity is ofered to tour operators, and this
flexible model underpins demand and manages risk while supporting and
de-risking development of the Monarch Airlines route network.
Tour Operations Cosmos Holidays,
Avro and somewhere2stay
The Tour Operations division of The Monarch Group,
comprising Cosmos Holidays, Avro and somewhere2stay,
ofers a flexible and wide choice of holidays to some 72
destinations worldwide.
Customers look to the Cosmos brand and its long-established reputation
for expertise and reliability to help them to navigate through a changing
landscape for holiday travel, and to purchase fully protected holiday
products with condence. Avro provides a broad range of charter seat
availability, duration and prices to meet demand from tour operators and
the growing dynamic packaging sector, selling overall in excess of one million
flight sectors annually, and somewhere2stay ofers low-cost hotel, villa
and apartment accommodation worldwide. The Tour Operations division
also operates white-label ofers under the brand names Monarch Holidays
and Monarch Hotels.
815,000
Passenger volumes in FY12
7.4m
Sector seats in FY12
3
The Monarch Group
ANNUAL REPORT 2012
589.0m
TOUR
OPERATIONS
683.5m
AIRLINE
OPERATIONS
86.3m
ENGINEERING
SERVICES
43%
6% 50%
Group gross revenue mix FY12
1%
10.4m
OTHER

Monarch Aircraft Engineering (MAEL)
MAEL provides important and award-winning aircraft
maintenance services from its principal bases at London
Gatwick, London Luton and Manchester airports to the
Monarch Airlines fleet and continues to attract blue-chip
third-party clients located in east and west Europe, the Middle
East, Australia and North America. In 2013, MAEL will open a
new state-of-the-art maintenance facility at Birmingham
Airport to complement its existing UK bases.
The company has expertise in maintaining legacy fleets and is also a leading
Maintenance and Repair Organisation (MRO) for new technology aircraft,
including the Boeing 787 Dreamliner, for which it is one of only six Boeing-
approved GoldCare providers worldwide.

Retail and Online
A nexus for Group e-commerce activity, the Retail and Online
activity supports all of the Groups divisions in the delivery of
their online and e-commerce strategies, providing the
expertise that ensures that the Group exploits new technology,
online trends and continues to innovate in bringing its travel
products to market.
20m
Group unique visitors in FY12
29%
Revenues from third-party customers in FY12
4
The Monarch Group
ANNUAL REPORT 2012
Adapting to a changing industry
and markets
With a 50-year trading history, the
Groups leading aviation and travel
brands have successfully adapted to
continuously changing industries
and customer markets.
1960 1970 1980

Growth of packaged holidays
to Spanish Costas
1961 Launch of Cosmos
1967 Monarch Aircraft Engineering
Limited launched
1968 Monarch Airlines launched
Proliferation of mass market
packaged holidays
1970 Monarch Airlines becomes
all-jet fleet
Cosmos adds flights from Manchester
and Birmingham and increases range of
destinations to include Greece, Portugal
and Yugoslavia
Monarch Aircraft Engineering expands
its UK footprint
Monarch Airlines carries one million
passengers annually
Monarch Airlines is the rst charter airline
worldwide to order next-generation
Boeing 757 aircraft
Monarch Airlines launches scheduled
services, Monarch Crown Service
Cosmos becomes rst mainstream tour
operator to introduce all-inclusive
European holidays
INDUSTRY TRENDS
MONARCH ADAPTS
5
The Monarch Group
ANNUAL REPORT 2012
1990 2000 2012

First Gulf War
Consolidation of tour operators
EU deregulation
Ryanair launches low-cost carrier
(LCC) model
Decline of national flag carriers
short-haul dominance
Cosmos Holidays acquires Avro and
signicantly expands destinations,
including Caribbean and Indian Ocean
Monarch Airlines expands its long-haul
fleet bringing two-class seating to the
charter market
9/11
Second Gulf War
LCC expansion erodes short-haul
charter market
Disintermediation of distribution
Monarch Aircraft Engineering
expands into Europe
Monarch Airlines expands
scheduled network
Cosmos launches somewhere2stay,
ofering flexible duration holidays
Rising fuel costs, higher taxation
Global nancial crisis
Consolidation
Cosmos celebrates ftieth anniversary
Programme to modernise and
reorganise the Group brings efciency
gains and focus on value
Monarch Airlines ofers capacity for
8.3 million passengers in 2012/13 and
strengthens scheduled services
MAEL announces Birmingham
Airport expansion
6
The Monarch Group
ANNUAL REPORT 2012
LEEDS-BRADFORD
LONDON GATWICK
LONDON LUTON
EAST MIDLANDS
BIRMINGHAM
MANCHESTER
SCHEDULED ROUTES
CHARTER ROUTES
CHARTER & SCHEDULED ROUTES
OUR BASES
ALICANTE
ALMERIA
ANTALYA
BARCELONA
BODRUM
DUBROVNIK
SPLIT
BORDEAUX
FARO
FUNCHAL
GIBRALTAR
IBIZA
LARNACA
PALMA DE MALLORCA
PAPHOS
ROME
VENICE
VERONA
MALAGA
MENORCA
NICE
MUNICH
SALZBURG
INNSBRUCK
FRIEDRICHSHAFEN
GENEVA
GRENOBLE
CORFU VOLOS
PREVEZA
KEFALONIA
ZAKYNTHOS
CHANIA
MALTA
SKIATHOS
MYTILENE
DALAMAN
RHODES
HERAKLION
KITTILA
Our network
Monarch Airlines operates scheduled services from six
UK bases London Gatwick, Manchester, Birmingham,
Leeds-Bradford, East Midlands and London Luton
airports. The Groups Tour Operations activity ofers
holiday destinations worldwide. Monarch Aircraft
Engineering provides maintenance and repair services
from bases in the UK and line stations overseas.
7
The Monarch Group
ANNUAL REPORT 2012
Monarch Airlines total seat inventory
SCHEDULED
OPERATIONS
TOUR OPERATORS
(COSMOS HOLIDAYS AND THIRD PARTIES)
70%
30%
LEEDS-BRADFORD
LONDON GATWICK
LONDON LUTON
EAST MIDLANDS
BIRMINGHAM
MANCHESTER
SCHEDULED ROUTES
CHARTER ROUTES
CHARTER & SCHEDULED ROUTES
OUR BASES
ALICANTE
ALMERIA
ANTALYA
BARCELONA
BODRUM
DUBROVNIK
SPLIT
BORDEAUX
FARO
FUNCHAL
GIBRALTAR
IBIZA
LARNACA
PALMA DE MALLORCA
PAPHOS
ROME
VENICE
VERONA
MALAGA
MENORCA
NICE
MUNICH
SALZBURG
INNSBRUCK
FRIEDRICHSHAFEN
GENEVA
GRENOBLE
CORFU VOLOS
PREVEZA
KEFALONIA
ZAKYNTHOS
CHANIA
MALTA
SKIATHOS
MYTILENE
DALAMAN
RHODES
HERAKLION
KITTILA
TRINIDAD
& TOBAGO
ORLANDO
TABA
ARRECIFE
FUERTEVENTURA
BANJUL
HASSI
MESSAOUD
HURGHADA
SHARM EL SHEIKH
LUXOR
DABOLIM,
GOA
TENERIFE
LAS PALMAS
TRINIDAD
& TOBAGO
ORLANDO
TABA
ARRECIFE
FUERTEVENTURA
BANJUL
HASSI
MESSAOUD
HURGHADA
SHARM EL SHEIKH
LUXOR
DABOLIM,
GOA
TENERIFE
LAS PALMAS
TRINIDAD
& TOBAGO
ORLANDO
TABA
ARRECIFE
FUERTEVENTURA
BANJUL
HASSI
MESSAOUD
HURGHADA
SHARM EL SHEIKH
LUXOR
DABOLIM,
GOA
TENERIFE
LAS PALMAS
TRINIDAD
& TOBAGO
ORLANDO
TABA
ARRECIFE
FUERTEVENTURA
BANJUL
HASSI
MESSAOUD
HURGHADA
SHARM EL SHEIKH
LUXOR
DABOLIM,
GOA
TENERIFE
LAS PALMAS
Monarch Airlines
Monarch Airlines today ofers scheduled services to some
35 destinations across 112 routes, principally to leisure
destinations around the Mediterranean and the Canary
Islands and to ski destinations in winter.
First Aviation, the flight broking division of the Group, ofers
scheduled airline and traditional charter capacity to tour
operators across over 30 routes in summer and 20 routes in
winter, including destinations in Europe, North America and
the Indian Sub-Continent.
Cosmos, Avro and somewhere2stay
Tour Operations, comprising Cosmos Holidays, Avro and
somewhere2stay, ofers some 72 holiday destinations
worldwide, with a focus on the Mediterranean, Egypt and North
Africa, Goa and the Indian Ocean, Mexico, the Caribbean and
Florida. Further specialist destinations include Finnish Lapland
and ski destinations in winter.
Monarch Aircraft Engineering
Monarch Aircraft Engineering provides maintenance from
facilities at London Luton, Manchester, Birmingham and
London Gatwick airports in the UK and overseas line
maintenance in Dublin, Malaga, Alicante, the Canary Islands,
Kiev, Warsaw, Goa and the Maldives.
Principal ofces
The Monarch Group, London Luton Airport
Monarch Airlines, London Luton Airport
Cosmos, Avro and somewhere2stay, Bromley
Monarch Aircraft Engineering, London Luton Airport
First Aviation, London Gatwick Airport
Monarch Airlines 2012/13
112
Scheduled routes
35
Scheduled destinations
Tour Operations 2012/13
72
Holiday destinations worldwide
10m
Holiday products across four continents
NORTH AMERICA & THE CARIBBEAN
AFRICA & MIDDLE EAST
ASIA
CANARY ISLANDS
8
The Monarch Group
ANNUAL REPORT 2012
From the Executive Chairman
Returning to protability
Overview
All of the Groups main divisions performed
well in the nancial year 2012 in what have
been challenging market conditions.
Monarch Airlines achieved good yield growth
in line with expectations and moved quickly
to strengthen its market position following
the closure of bmibaby. Tour Operations,
comprising the Groups holiday brands Cosmos
Holidays, Avro and somewhere2stay, and
Monarch Aircraft Engineering maintained their
protable performance of recent years and
now have laid good foundations for growth.
Financial progress in line with plans
I am, therefore, pleased with the progress
that the Group has made over the last year
in delivering results in line with our business
plan objectives. For the 12 months ending
31 October 2012, Group turnover net of intra-
Group sales increased from 757.8 million to
825.1 million, or 8.9 per cent. On a pre-tax and
pre-exceptional basis, losses were substantially
reduced, from 51.1 million to 14.9 million.
These overall results for the Group reflect
Monarch Airlines good yield growth, the
ongoing protable performance in the tour
operating and engineering divisions, strong
discipline on cost control, which achieved a
planned operational like-for-like 31.6 million
reduction in operating expenses, and the
delivery of an efective e-commerce strategy.
This performance represents sound
progress in the rst year of our two-year
turnaround plan, and we are advancing
towards our target of restoring the Group
to overall protability by November 2013.
Maintaining our momentum
Monarch Airlines is now well advanced
with its modernisation and cost reduction
programmes at a time when other larger
operators continue to face important
restructuring challenges, and our proposition
provides clear and real choice to consumers
who value a superior travel experience at a
competitive price. On 29 November 2012,
we announced plans for the re-equipping
of the Monarch Airlines aircraft fleet,
which envisages an order for a total of 62
replacement and expansion aircraft for
delivery up to 2024, facilitating improvement
in service levels to the Airlines customers,
better asset utilisation and efciency, and
enabling Monarch Airlines to be benchmarked
against low-cost competitors. Invitations
have been issued to the worlds largest
aircraft manufacturers to submit proposals
through a strategy which will consider both
leasing and purchasing of aircraft, and this is
continuing to progress in line with our plans.
We are advancing towards our target
of restoring the Group to overall
protability by November 2013.
Iain Rawlinson
Executive Chairman
9
The Monarch Group
ANNUAL REPORT 2012
The Tour Operations division of the Group
now has potential to improve its growth
prospects as it makes investments in a new
inventory management software and in its new
selling platform, increasing awareness of the
Cosmos brand. Monarch Aircraft Engineering
has announced its plans for expansion with
a further engineering facility at Birmingham
Airport and has recently conrmed an
important new customer which will provide
the critical mass to develop new business at
both this facility and across its wider network.
Strengthened governance and
leadership team
The governance and leadership team
of Monarch have been signicantly
strengthened as the Group continues to
modernise and lay the foundations for
the next phase of its development.
The Board of Monarch Holdings Limited
(the holding company of the Group),
of which I am Executive Chairman, was
signicantly strengthened during the year
by the appointments of Robert Palmer
as Group Finance Director, and of Sir
Roy McNulty and Austin Reid as Non-
Executive Directors. Further details of the
Directors and the Group Management
Board can be found on pages 28 to 31.
The industry sectors in which we operate
are evolving quickly and it is a priority for
the Group to engage in the flow of ideas
that are both shaping this change and
bringing new opportunities for the future.
With this document, which is the Groups rst
published Annual Report and Accounts, as
well as a new Group corporate website, we are
underlining our commitment to enhancing
our stakeholders understanding of our
capabilities and prospects as a Group, and
the strong industrial logic which underpins
our unique combination of businesses.
The Monarch Foundation a force for
good in our communities
The leadership of the Group recognises that
we have a responsibility to be an efective
corporate citizen in the communities in
which we operate and beyond. Not only
do our millions of customers expect the
highest standards of service delivery, they
also expect our approach to business to
be, as a minimum, authentic, inclusive and
transparent and in the area of philanthropic
activity to be doing what we can.

Our Group has a long history of charitable
engagement and this is something of which
it can be proud. The size and nature of The
Monarch Group is such that through more
efective coordination of these activities we
should be able to build up our efectiveness
as a good corporate citizen in the locations
where we operate and, at the same time,
positively reinforce the Groups brand values
to our millions of customers. In May 2013 we
are launching The Monarch Foundation, an
umbrella organisation within the The Monarch
Group, which will organise all of the charitable
activity that is carried on by the Group and in
the Groups name. Further information about
this important new initiative in the life of the
Group can be found on pages 34 and 35.
Outlook
Our business model and unique combination
of businesses is resilient and the Group is now
better placed to unlock its potential, although
we remain cautious about the outlook and
expect difcult market conditions to persist.
We are pleased with our continuing progress
in increasing the levels of recognition of the
Monarch and Cosmos travel brands, supported
by use of technology, and of consumer
oferings diferentiated by superior service
levels and choice, as well with the growth in
reputation of our engineering activity. We
continue to focus on strengthening our
commercial proposition and to look at how
best to serve our customers, and we are laying
the foundations for the Groups future growth.
We thank our shareholders for their support
and all our employees for their important
contribution to the good results achieved
in the last few years, and in 2012.
Iain Rawlinson
Executive Chairman
29 April 2013
Q&A with the Executive
Chairman
What is the industrial logic for
The Monarch Groups businesses?
Our combination of businesses and their
mutual interdependency is unique in the
market and provides good opportunities
to yield additional margin. The airline
and tour operating divisions work
together to bring product to market,
thereby de-risking growth, while the
engineering activity is using its expertise
in servicing Monarch Airlines to attract
high-quality third-party customers.
How is Monarch Airlines beneting
from industry change?
The closure of bmibaby in 2012 was an
opportunity for us to absorb key routes
and flying capacity. This is contributing
to the growth of Monarch Airlines in 2013.
Much of the catalyst for current change
in the airline industry arose in 2011 with
the increase in fuel cost. By being able to
move quickly to reorganise the business,
we have been able to signicantly reduce
the risks of high fuel price volatility.
In what ways is Cosmos able to compete
in the evolving holiday marketplace?
The implementation of the new TravelBox
inventory management software flattens
the technology landscape between Cosmos
and its competitors. It enables Cosmos
to compete head-on with products for
direct customers to purchase, and to
mingle these with a wider range of travel
products. Demand is increasing for
traditional package products underpinned
by ATOL protection, and this plays to
the strengths of the Cosmos brand.
What is the potential for the aircraft
engineering division?
Monarch Aircraft Engineering is in many
ways the hidden gem in the Group. We
have set ourselves the task of breaking
out of the traditional perimeters for this
business, and with the increase in MRO
capabilities and a new state-of-the-art
facility at Birmingham Airport the prospects
for further growth in its third-party
business are signicantly enhanced.
For a full video interview with Iain Rawlinson,
visit The Monarch Group website
www.monarchholdingslimited.com
10
The Monarch Group
ANNUAL REPORT 2012
DIFFERENTIATED,
HIGH-QUALITY
CUSTOMER
PROPOSITION
LEISURE-FOCUSED
TRAVEL PRODUCTS
AND SUPPORTING
INFRASTRUCTURE
STABLE
FINANCIAL
PLATFORM
MUTUALLY SUPPORTIVE
BUSINESSES DRIVE
SYNERGIES
INTRA-GROUP
COOPERATION
OPTIMISES MARGIN
BALANCED MIX
OF DIRECT AND
THIRD-PARTY
DISTRIBUTION
FLEXIBLE PRODUCTS
AND INNOVATIVE
THINKING
A unied group
of businesses
Business model
Unlocking value
The four unied activities within
the Group Monarch Airlines,
Tour Operations, Monarch
Aircraft Engineering and Retail
and Online form a secure and
sustainable business model.
11
The Monarch Group
ANNUAL REPORT 2012
DIFFERENTIATED, HIGH-QUALITY
CUSTOMER PROPOSITION
The delivery of superior service
at equivalent price is the principle
underpinning the Groups businesses.
Across all divisions there is a focus on
continuing to deliver a high-quality
product proposition, including
superior customer experience at a
competitive price, and on reinforcing
these core strengths by maintaining
product diferentiation and improving
ancillary revenue generation.
FLEXIBLE PRODUCTS AND
INNOVATIVE THINKING
The Groups travel brands ofer
unique levels of choice and flexibility
for our customers and we continue
to provide innovative, convenient
and simplied solutions to enhance
their experience, including:
Monarch Airlines Airpacks
enable customers to build their
own booking.
Tour Operations provides the
flexibility of dynamic packages
with the service and security of
traditional holiday packages.
Monarch Aircraft Engineerings
innovative mobile App provides
customers with real-time
status updates.
LEISURE-FOCUSED TRAVEL
PRODUCTS AND SUPPORTING
INFRASTRUCTURE
Our Group is highly focused on
strengthening its leading positions
and the quality of its product
oferings in its principal market
of leisure travel, underpinned
by the strategically important
supporting activities of aircraft
engineering and retail and online.
MUTUALLY SUPPORTIVE
BUSINESSES DRIVE SYNERGIES
Intra-Group allocation of resources
transfers important knowledge
and skills across divisions and
drives both the implementation of
strategy and value maximisation.
BUILDING A STABLE FINANCIAL
PLATFORM
By maximising the value of the Groups
travel brands and supporting businesses,
while capitalising on intra-Group trading
opportunities, we are building a stable
nancial platform enabling us to also lay
the foundations for future growth. This is
underpinned by a sound and appropriate
framework for corporate governance.
BALANCED MIX OF DIRECT AND
THIRD-PARTY DISTRIBUTION
Our travel brands distribute product
through direct-to-consumer and
third-party trade channels, and
this combination optimises margin
performance and minimises risk.
INTRA-GROUP COOPERATION
OPTIMISES MARGIN
The sale of products and services
between the Groups mutually
compatible divisions is a source of
revenue and prot generation, and
de-risks development activity.
Monarch Airlines provides the
security of good quality, reliable
flying to support the Tour
Operations proposition.
Tour Operations provides structural
underpinning of demand for the
Airlines scheduled flying programme.
Monarch Aircraft Engineering
allows for a high operational
performance within the Airline,
supporting both the Monarch
and Cosmos travel brands.
12
The Monarch Group
ANNUAL REPORT 2012
Monarch Airlines
A unique market position
Established in 1968
Our distinct model is as a scheduled
leisure airline, flying principally to
short-haul destinations around the
Mediterranean, the Canary Islands
and destinations for winter ski. We
operate from six UK bases London
Gatwick, Manchester, Birmingham,
East Midlands, London Luton and
Leeds-Bradford airports and ofer
capacity in 2012/13 of some
eight million sector seats.
Our scheduled leisure network
today operates across some
35 destinations and 112 routes.
13
The Monarch Group
ANNUAL REPORT 2012
39
Aircraft in 2013
8.3 m
Sector seats for 2013
9.0%
Growth in revenue per seat in FY12
Alysha Smith, Cabin crew

Monarch Airlines has a long and rich

heritage and its founding family values
are proudly reflected through the
delivery of choice, quality and superior
customer service.
We provide across our network a
clear and real choice to consumers
who value superior customer
experience at a competitive price.
As a strategic priority, we ofer airline
capacity to tour operators both
through scheduled operations and
traditional charter activities.
We are re-equipping and expanding
our aircraft fleet to enhance our
customer ofering.
14
The Monarch Group
ANNUAL REPORT 2012
Key operational statistics FY12 FY12 FY11 Change
Total capacity (000) 7,400 7,103 +4.2%
Scheduled capacity (000) 6,035 5,304 +13.8%
Total passengers (000) 6,400 6,300 +1.6%
Scheduled passengers 5,356 4,631 +15.7%
Scheduled load factor (%) 88.8 87.3 +1.4pts
Total revenue per seat () 91.43 83.88 +9.0%
Total turnover (m) 673.7 608.5 +10.8%
Routes 88 56 +57%
Monarch Airlines
continued
For the 12 months ending 31 October 2012,
Monarch Airlines achieved growth in total
revenues of 10.2 per cent to 683.5 million
(2011: 620.2 million), driven by increased
passenger volumes and yields and the
successful expansion of routes and airport
bases. Losses before tax were reduced by 47
per cent to 37.2 million (2011: 70.1 million),
reflecting the improved trading as well as
the achievement of 31.6 million of planned
Group operational like-for-like cost savings,
the majority of which related to the Airline.
Growth in capacity, routes and bases
Monarch Airlines total capacity during the
year increased by 1.8 per cent to 7.2 million
sector seats, as 32 new routes were added
to provide 88 routes in total. This increase
was in large part driven by the decision in
May 2012 to absorb key short-haul leisure
routes from UK Midlands airports following
the closure of bmibaby, and to further
consolidate the Airlines position in this region.
The absorption of new capacity enabled
the Airline to introduce a new base at East
Midlands Airport in summer 2012 and to launch
new flights to key destinations across the
Mediterranean. Already a leading scheduled
carrier at Birmingham Airport, operations
were expanded through the introduction of
additional frequencies on existing flights, plus
the addition of new routes including Barcelona,
Grenoble, Madeira and Sharm El Sheikh.
#Ff
FastFacts NO.1
Monarch Airlines launched its rst
winter ski programme in 2012/13,
serving key resorts across the Alps
and Dolomites.
15
The Monarch Group
ANNUAL REPORT 2012
589.0m
TOUR
OPERATIONS
683.5m
AIRLINE
OPERATIONS
86.3m
ENGINEERING
SERVICES
43%
6% 50%
Proportion of Group gross revenues
1%
10.4m
OTHER
Consolidation of the Airlines position in the
Midlands underpins the plans for the Airline
to grow from a capacity of 7.4 million seats in
FY12 to 10 million seats over the medium term.
Airline operations from the North of
England were also strengthened with the
launch of a sixth UK base at Leeds-Bradford
airport, where two A320 aircraft will be
based from summer 2013, to provide a new
choice to key leisure destinations across
the Mediterranean and for winter ski.
For 2013, the Airline plans to operate 112
routes to 35 destinations from six UK bases.
Increasing passenger volumes, customer
awareness and yields
Scheduled passenger volumes during the
year increased by 15.7 per cent, reflecting
both network expansion as well as a strong
improvement in customers awareness
and understanding of the proposition.
The Airline successfully delivered its rst
national television advertising campaign
in summer 2012, and this was supported by
promotional activities across a variety of
media channels. Since the year end, a new
national advertising campaign has been
launched with the aim of further increasing
awareness and bookings for summer 2013.
A focus on enhancing our product ofer
to customers, which included the re-
aggregation of extra legroom seats, baggage
options and meals into a choice of three
optional Airpacks, helped to drive a strong
yield performance and revenue per seat
increased by 9.0 per cent. This remains
an ongoing theme for development.
Market share strengthened
The Airline strengthened market share on its
key scheduled routes and from key bases.
During summer 2012 Monarch Airlines was
either the number one or number two carrier on
70 per cent of its routes and, for the full-year
period, it had the leading market share of all UK
carriers on its routes from Birmingham (36 per
cent market share) and Manchester airports
(27 per cent market share) and the second-
largest share on its routes from London
Gatwick (17 per cent market share). This
performance reflects the Airlines diferentiated
customer proposition of choice, value and
superior customer service, and its market
positioning as a strong alternative to low-cost
carriers in many scheduled leisure markets.
Underpinned by tour operator volumes
Wholesale seat allocations delivered to the
Airline by the Groups flight broking division,
First Aviation, and sales made to the trade
by Avro, the flight-only specialist within the
Groups Tour Operations division, increased in
line with the Airlines total volume growth for
the period. These distribution channels to third
parties, which during the year included 123,000
sector seats supplied to Thomas Cook,
continue to provide a strategically important
underpinning of sales across the flying network.
Growth in online
Unique visitors to the Monarch Airlines website
during the year increased by 41 per cent
to 11 million, while bookings for scheduled
flights increased by 11 per cent to 1.1 million.
The overall online proposition was enhanced
through the launch of a mobile website
designed specically for use with iPhones,
as well as local-language websites in key
European markets to drive in-bound customer
trafc. Monarch.co.uk, the Airlines customer
website, was also named by the UK travel
industry as the top airline website for 2012.
Re-equipping the fleet
The Group has embarked on plans for the
re-equipping of Monarch Airlines aircraft
fleet. This envisages an order for a total of
45 replacement and expansion aircraft for
delivery up to 2021, enabling improvement in
service levels to Monarch Airlines customers,
better asset utilisation and efciency, and
cost savings. Invitations have been issued to
the worlds largest aircraft manufacturers to
submit proposals through a strategy which
will consider both leasing and purchasing
of aircraft. In advance of the fleet renewal
programme, Monarch is taking delivery of
two new Airbus 320 aircraft in March and
April 2013, and a further two new A321
aircraft in May 2013 to replace older aircraft
which are being retired from the fleet.
15.7%
Growth in scheduled passengers in FY12
16
The Monarch Group
ANNUAL REPORT 2012
Tour Operations
Flexible, asset-light model
Largest UK independent tour
operator, comprising Cosmos
Holidays, Avro and somewhere2stay.
Flexible and secure customer
choice, from mainstream to
specialist holidays.
Secure supply of high-quality flight
capacity from Monarch Airlines.
17
The Monarch Group
ANNUAL REPORT 2012
589.0m
TOUR
OPERATIONS
683.5m
AIRLINE
OPERATIONS
43%
6% 50%
Proportion of Group gross revenues
1%
86.3m
ENGINEERING
SERVICES
10.4m
OTHER
Tour Operations division
at a glance
Cosmos Holidays Founded in 1961.
Provides a fully secure and protected
package holiday ofer across 72 holiday
destinations on four continents.
Avro Award-winning flight-only
supplier, providing a broad range of seat
availability, duration and prices to tour
operators, and sells over one million
flight sectors annually.
somewhere2stay Ofers low-cost
hotel, villa and apartment
accommodation worldwide.
815,000
Passenger volumes in FY12
#Ff
FastFacts NO.2
Our top ve package holiday
destinations by annual passenger
volume are the Canary Islands,
Greece, the Balearic Islands,
Mainland Spain and Goa.
Antonia Frampton,
Overseas resort representative

The Cosmos team is on hand at our

destinations to help our customers with
anything they need during their stay,
which is one of the ways we can be sure
every one of our customers enjoys
a 100% holiday.
18
The Monarch Group
ANNUAL REPORT 2012
0 20 40 60 80 100
Direct
Third-party retail
%
Product and distribution model
FY12/13
Package
Accom
only
Flight
only
Total
Tour Operations
continued
Tour Operations
For the 12 months ending 31 October 2012, the
Tour Operations division, comprising Cosmos
Holidays, Avro and somewhere2stay, achieved
growth in total revenues by 3.2 per cent to
589.0 million (2011: 570.7 million) and prot
before tax was 5.6 million (2011: 5.8 million).
Outperforming the market on
key destinations
Against the backdrop of a difcult consumer
environment, a strong margin performance
during the year was driven by high-quality
product oferings for winter 2011/12 and
summer 2012, particularly package holidays
to Goa, Greece and Florida. For summer
2012, sales of holidays to Greece, Cosmos
Holidays leading package holiday destination,
increased by 10 per cent in a total market which
declined by 10 per cent, increasing Cosmos
Holidays share of this key package holiday
destination. An increased focus on product
to Goa for winter 2011/12 and to Florida for
summer 2012 achieved growth in sales of
package holidays to these destinations by
75 per cent and 83 per cent respectively.
Strong brand positioning and
market position
Customers look to the Cosmos brand and
its long-established reputation for expertise
and reliability to help them to navigate
through a changing landscape for holiday
travel and to purchase holiday products
with condence. The Cosmos proposition is
focused on ofering the flexibility of dynamic
packages to match customers demands,
combined with simple-to-use search and
booking, destination-based customer
support, fully secure and ATOL-protected
holidays and value for money. Cosmos
continues to achieve high ratings against
these brand priorities in customer research,
with 95 per cent rating their holiday overall as
good or excellent, and 92 per cent good or
excellent value for money in January 2013.
A strong business performance during the
tough trading conditions of the last 12 months
has consolidated the divisions market
position as the UKs largest independent
tour operator and the third-largest ATOL
operator in the UK overall, with total ATOL-
licensed passengers of 700,000 and
market share of 3.3 per cent in 2012.
Ofers flexibility of dynamic packages,
with the service levels, safety and
security of traditional package holidays.
Mainly sells into Monarch Airlines
scheduled air capacity as opposed to
traditional, higher-risk charter
allocations.
Unrivalled choice of departure and
duration options through Monarch
Airlines scheduled inventory.
19
The Monarch Group
ANNUAL REPORT 2012
Meeting the evolving needs of customers
The Tour Operations division has across all
brands and products a balanced mix of direct
and third-party retail distribution channels.
Over the next ve years, this mix will evolve,
most notably in direct sales to consumers of
Cosmos Holidays package product, arising
from the implementation of the new TravelBox
flexible reservations platform and trade web
portal which has been completed in early 2013.
This new platform is transforming the breadth
of travel product across all brands, meeting
the evolving needs both of our customers and
suppliers and signicantly increasing the speed
to market of the Tour Operations business.
The implementation of new technology
is a core feature of a broader business
transformation programme, which is intended
to modernise and bring further efciencies
into the division and to improve the
technology which underpins buying, inventory
management and the online customer booking
path. Among the benets to the division
over the next ve years are that Cosmos will
become a scale travel marketplace, selling an
increased proportion of own and third-party
stock direct to consumers, and in business-
to-business markets its share is expected
to increase through strong distribution
agreements and broader inventory.
95%
of customers rated their Cosmos holiday
overall as good or excellent (Cosmos
Customer Research: January 2013)
20
The Monarch Group
ANNUAL REPORT 2012
Monarch Aircraft Engineering
Strong strategic partnerships
Established in 1967, MAEL provides
important aircraft MRO services
to the Monarch Airlines fleet,
contributing to the Airlines
efciency and reliability.
MAEL continues to grow its
global blue-chip third-party
customer base.
Principal bases are at London
Gatwick, London Luton and
Manchester airports.
Further line stations are at
Birmingham, East Midlands, Leeds-
Bradford, Edinburgh, Dublin, Malaga,
Alicante, Goa, the Maldives, Canary
Islands, Kiev and Warsaw.
Superior knowledge in maintaining
legacy fleets and new technology
aircraft, including Boeing 787.
One of only six Boeing-approved
GoldCare providers worldwide.
Jonathan Bell,
Apprentice engineer

For 42 years MAEL has been producing

high-calibre aircraft engineers through
its highly regarded apprenticeship
scheme and during 2012 enrolled its
700th apprentice.
21
The Monarch Group
ANNUAL REPORT 2012
#Ff
FastFacts NO.3
Opening in late 2013, MAELs new
110,000 sq. ft. state-of-the-art
facility at Birmingham Airport will
have capacity for three wide-body
or 10 narrow-body aircraft.
Current third-party engineering
customers include:
American Airlines, Air Arabia, Air Berlin,
Alitalia, Cyprus Airways, easyJet,
Emirates, LOT Polish Airlines, Aer Lingus,
British Airways City Flyer, DHL, Flybe,
Jet2.com, Thomson Airways, Titan
Airways and Wizz.
A growing market in which to increase
third-party revenues
Global market for aircraft maintenance
forecast to grow from $49bn in 2012
to $65bn by 2022 (Source: Airline
Economics & Aviation News Global
Survey 2012).
Plan in place to deliver 50% of MAEL
business via third parties by 2015.
Engineers from MAEL flew with customer
LOT Polish Airlines rst Boeing 787
Dreamliner on its ferry flight from Seattle
to Warsaw in November 2012.
22
The Monarch Group
ANNUAL REPORT 2012
FY12 revenue mix
BASE
MAINTENANCE
LINE
MATERIAL
SUPPORT
SERVICES
CMC
*
PART M
SPARES
TRADING
36% 3
2
16%
10%
33%
* Component Maintenance Centre
589.0m
TOUR
OPERATIONS
683.5m
AIRLINE
OPERATIONS
86.3m
ENGINEERING
SERVICES
43%
6% 50%
Proportion of Group gross revenues
1%
10.4m
OTHER
MAEL core skills and capabilities
Aircraft hangar maintenance
Line maintenance
Global response teams
Design and installation
True engineering skills
Skills training and apprenticeship
Monarch Aircraft Engineering
continued
23
The Monarch Group
ANNUAL REPORT 2012
Forecast customer revenue progression 2012-15
2015 2012
50%
50%
70%
30%
MONARCH
AIRLINES
THIRD-PARTY
CUSTOMERS
THIRD-PARTY
CUSTOMERS
MONARCH
AIRLINES
MAEL has secured approval for Boeing
737NG maintenance, strengthening its
capabilities in Boeing narrow body-type
aircraft, and adding to its existing credentials
as one of only six worldwide Boeing GoldCare
partners. Following a further new agreement
in 2012, MAEL now also provides line
maintenance in Malaga, Spain to a fleet of
Embraer 170 and 190 aircraft operated by
Flybe, Europes largest regional airline.
In 2012 MAEL was awarded an important
contract by LOT Polish Airlines to provide
technical support from a line maintenance
facility in Warsaw for the rst Boeing 787
Dreamliner aircraft to be operated from
Europe. This aircraft entered into service on
15 November 2012 and technical acceptance
was undertaken by MAEL at Boeing in Seattle.
New hangar at Birmingham Airport
Some 60 per cent of the worlds airline
carriers outsource their heavy maintenance
and the value of this global market is
forecast to increase by over 30 per cent
to $65bn over the next 10 years (Source:
Airline Economics & Aviation News Global
Survey 2012). As operators increasingly
seek to minimise the costs of positioning
their fleets for maintenance, MAEL is able
to consider new opportunities for hangar
capacity at international gateway airports.
In November 2012 MAEL announced
the construction of a new 110,000 sq. ft.
state-of-the-art maintenance facility at
Birmingham Airport to be completed in late
2013, complementing its existing facilities.
The new hangar, creating up to 300 new
jobs, will enable MAEL to service a greater
share of the growing UK market for aircraft
maintenance services (including international
long-haul carriers) and to help achieve its
target of 50 per cent of revenues being
derived from third-party customers by 2015.
This additional capacity enables MAEL
to secure new business and to enter into
new sectors for aircraft technology and, in
May 2013, MAEL entered into an important
commercial agreement with Flybe to be a
key entry customer for the new Birmingham
facility. With this agreement, MAEL will
provide year-round maintenance support to
Flybe, including entry into new aircraft and
OEM types, and will employ a large number
of highly skilled and qualied engineers
across the Birmingham, Manchester, London
Gatwick and East Midlands airport bases.
MRO of the Year 2013
MAEL received an endorsement of the
progress and reputation it continues to forge
as a global leader in aircraft maintenance
services when, in January 2013, it was awarded
MRO of the Year 2013 by aviation industry
customers at the Aviation 100 Awards. The
highly prestigious award followed an 11-month
customer satisfaction survey in which MAEL
achieved a clean sheet rating of excellence
from its customers across the globe. MAEL
has also been listed in the top 10 MROs for
Europe, the Middle East and North Africa
and, in May 2012, was elected MRO of Choice
among its peer group and suppliers.
High-quality training to meet
future requirements
MAEL produces through its highly regarded
apprenticeship scheme a strong pipeline of
skilled engineers for both its own operations
and the wider aviation industry. In January
2013 the new Monarch Aircraft Engineering
Training Academy (MAETA) at London
Luton Airport was opened, providing new
classrooms and state-of-the-art learning
facilities to support several aircraft types,
as well as the capacity to double the in-
take of apprentices for 2013 to 24.
29%
Increase in operating prot in FY12
For the 12 months ending 31 October 2012,
Monarch Aircraft Engineering achieved growth
in total revenues by 8.9 per cent to 86.3
million (2011: 79.2 million), of which 29 per
cent was derived from third-party customers,
reflecting the continued focus of the business
on building maintenance and repair and
consultancy services to blue-chip customers
globally. Prot before tax increased by 83
per cent to 5.3 million (2011: 2.9 million).
Strong industry credentials
Synonymous with the Monarch brand, MAEL
has a long-standing global reputation for
quality and high standards of service and
this reputation is the cornerstone of its
relationships with customers, regulatory
bodies and Original Equipment Manufacturers
(OEMs), including Boeing, Airbus and Embraer.

24
The Monarch Group
ANNUAL REPORT 2012
Retail and Online
A nexus for Group
e-commerce activity
Supports delivery and management
of e-commerce strategies across all
Group platforms.
Focused on technology innovation
and exploiting online trends.
Driving customer engagement
through Twitter, Facebook and
other social media channels.
#Ff
FastFacts NO.4
Across the Groups brands, customer
engagement with social media
continues to advance, with a 300%
increase in Facebook likes and a
189% increase in Twitter followers
in 2012.
25
The Monarch Group
ANNUAL REPORT 2012
20m
Group unique visitors
in FY12
The Retail and Online activity supports the
Groups divisions in delivering their online
and e-commerce strategies, and provides
e-commerce expertise to ensure that the
Group exploits new technology, online trends
and continues to innovate in the travel
market. Where appropriate, the Groups
divisions share common themes to ensure
efciency in delivery and management
of online and e-commerce solutions,
although this is balanced by the bespoke
requirements driven by operating in very
diferent areas of the online travel market.
Strong and rapidly growing online
market positions
The Group continues to make signicant
advances in e-commerce capabilities,
including mobile, with 20 million unique
visitors to the Groups customer online
platforms for the 12 months ended 31
October 2012, up 21 per cent on the prior
year, including an increase in unique visitors
to the Monarch Airlines website of 30 per
cent. Some 1.1 million customer bookings
were made through the Groups websites
during the year, generating 478.4 million
of Group revenue (2011: 404.2 million), an
increase of 18.4 per cent on the prior year.
In September 2012, Monarch.co.uk was named
as the top airline website at the UK Travelmole
Web Awards and was commended for its
excellent graphic communication, superb
online copy and salesmanship as well as its
strategies and techniques for enhanced site
conversion. New local-language websites and
booking processes for Monarch Airlines have
also been launched for Germany, Italy, Spain
and France to support new routes and increase
the share of in-bound customer bookings.
A priority focus within the Tour Operations
division has been the roll-out of new TravelBox-
powered booking processes to support
the business transformation programme
and to optimise conversion rates across a
broader range of package, accommodation-
only and flight-only products.
Mobile innovation and future
development
Within the fast-moving mobile Internet
marketplace, an online booking service was
launched for Monarch Airlines, commencing
with a website optimised for iPhone devices.
Through this service, which can be accessed
by iPhone users visiting the Monarch.co.uk
website or linking from a comparison website,
customers can search and book all scheduled
flights, select seating and baggage options
and pay for their booking using a card or
PayPals mobile-optimised checkout.
A new Smartphone App was launched in April
2013 containing a variety of useful features
designed to make customers journeys more
enjoyable, including the ability to nd, book
and check the status of flights, nd directions
and trafc reports for journeys to airports,
as well as a function for locating a parked
car on return to the airport of departure.
The future strategy for Retail and Online
includes a continuing focus on mobile and
further innovation for the Groups consumer-
facing websites in the areas of personalisation,
loyalty, social media and rich content.
Group Retail and Online key performance metrics FY12
Total
Change
(YOY)
Search unique visitors (millions) 20 +21%
Booked revenue (m) 478.4 +18%
Average revenue per booking () 412 +10%
26
The Monarch Group
ANNUAL REPORT 2012
Financial review
Trading ahead of expectations
In the rst year of its two-year turnaround,
the Group has delivered an improved
nancial performance for the 12 months
ending 31 October 2012, trading ahead of
the expectations of the turnaround plan,
which envisages a return to protability in
the 2013 nancial year. Loss before tax on an
adjusted basis fell by 71 per cent from 51.1m
to 14.9m as a result of cost control, network
and revenue management improvements in
Monarch Airlines, and strong contributions
by Tour Operations and Monarch Aircraft
Engineering. Adjustments made to loss before
tax are set out in more detail in note 2 to the
nancial statements and relate to impairment
and losses on sale relating to the renancing
of A321 aircraft in 2012 and the early exit from
service of legacy A320 aircraft in 2013. Loss
before tax before adjustments also fell sharply
by 52 per cent from 70.2m to 33.4m.
Cash flows and nancial position
Following the completion of a shareholder
renancing in November 2011, the Group
now has a solid nancial footing which
facilitates the return to protability and
allows the Group to plan for the future. The
net cash inflow from operating activities of
32.6m (2011: nil) was delivered through
careful management of cash and the
positive efects of growth on working capital.
Substantial capital investment continued
during the year with a 11.2m cash outflow
to acquire tangible xed assets, principally
aircraft-related. Whilst restricted deposits
increased by 34.9m, after shareholder
nancing inflows of 20.0m, cash increased
by 9.3m during the year with unrestricted
cash reserves of 49.9m held at 31 October
2012 in addition to 51.6m of restricted
cash. Reflecting banking industry trends,
restricted cash deposits are now required
by a number of parties, most notably credit
card providers. During the year, the Group
made good progress in increasing the range
of card-processing arrangements that are
available, as well as in reducing both the cost
of these and the related collateral required.
On 15 November 2011 the Groups shareholders
provided an additional 77.0m of funding as
part of a renancing exercise undertaken in
the autumn of 2011. The 77.0m additional
funding comprised of 20.0m of equity
preference share capital, a 20.0m loan,
a 10.0m increase in unutilised standby
facilities to 25.0m, and up to 27.0m
of aircraft lease deferrals during the
15-month period to December 2012.
Robert Palmer
Group Finance Director
Trading ahead of expectations of the
turnaround plan, loss before tax on
an adjusted basis fell by 71 per cent.
27
The Monarch Group
ANNUAL REPORT 2012
The Group has held discussions with the
CAA about the ATOL renewal. Based on
these discussions, the Groups forecasts,
taking into account reasonably possible
changes in trading performance, show
that the Group is forecasting to meet the
nancial terms expected to be required
by the CAA. Accordingly, the Group has
no reason to believe that the renewal will
not be granted on acceptable terms using
an equivalent basis to previous years.
The Directors have a reasonable expectation
that the Company and the Group have
adequate resources to continue in operational
existence for the foreseeable future.
Thus, they continue to adopt the going
concern basis in preparing the nancial
statements. Further details of the going
concern basis can be found in note 1 to the
nancial statements, accounting policies.
Financial risk management objectives
and policies
The Groups activities expose it to a number
of nancial risks including cash flow risk,
credit risk, liquidity risk and price risk. The use
of nancial derivatives is governed by the
Groups policies approved by the Board of
Directors, which provide principles on the use
of nancial derivatives to manage these risks.
The Group does not use derivative nancial
instruments for speculative purposes.
Cash flow risk
The Groups activities expose it to the
nancial risks of changes in foreign currency
exchange rates. The Group uses foreign
exchange forward contracts to hedge these
exposures. Cash reserves are invested
on a commercial basis to achieve returns
of interest both in the short and medium
term. Loans on aircraft are negotiated
with a xed margin over Sterling LIBOR.
Credit risk
The Groups principal nancial assets are bank
balances and cash, trade and other debtors.
The majority of Airlines and Tour Operations
receipts are in advance of departure date and
so the credit risk of customers defaulting on
payment is small. Relationships are maintained
with customers and reviews of credit are
undertaken on a regular basis. The Group has
no signicant concentration of credit risk,
with exposure spread over a large number
of counterparties and customers. Within
the engineering division, credit insurance
is maintained against the insolvency of its
third-party customers. The credit risk on liquid
funds and derivative nancial instruments
is limited because the counterparties are
banks with high credit ratings assigned by
international credit rating agencies.
Liquidity risk
In order to maintain liquidity to ensure that
sufcient funds are available for ongoing
operations and future developments, the
Group uses a mixture of long-term and short-
term debt nance (including operating leases)
for the purposes of capital expenditure and
also actively manages the level of working
capital. Most aircraft are now nanced with
third-party operating lessors, with all debt
being provided from the shareholders.
Having produced detailed forecasts and
budgets for the Group, the Directors
believe that the Group will be able to
continue trading through efective use of
operating cash flows, sale and leaseback
arrangements and shareholder facilities.
Price risk
The Group is exposed to commodity price
risk. The main commodity purchased by
the Group is jet fuel and the Group uses
fuel hedging contracts to try and reduce its
exposure to short-term fuel price changes.
The Group, however, remains exposed to
longer-term changes in the fuel price.
Market risk
The Group is dependent on credit and trading
lines being made available by various banking
and nancial institutions to allow operating
leases of aircraft, credit card processing,
banking facilities and hedging lines. Over
the last few years, the availability of nancial
credit and trading lines has become less
certain. The Group has sufcient lines for
its present needs and is managing the risk
through expanding the range of arrangements
to a larger number of counterparties.
Dividends
The Directors have not proposed a dividend for
the year (2011: nil).
Policy and practice on payment
of creditors
Monarch has partnership arrangements
with many of its biggest suppliers and aims
to pay all suppliers on time in accordance
with contractual and legal obligations. At
31 October 2012, the number of creditor days
outstanding was 40 days (2011: 38 days).
Robert Palmer
Group Finance Director
29 April 2013
Principal risks and uncertainties
The Group uses approximately 400,000
tonnes of jet fuel a year. Volatility in the price
of oil and petroleum products can have a
material impact on operating results. This price
risk is partly hedged through the purchase of
jet fuel in forward markets, which can generate
a prot or a loss, and through setting budget
fuel price assumptions above market price.
The Airline operation faces competition
from other airlines on its routes and from
other modes of transport. Tour Operations
competes against larger rivals and online
travel agents, and MAEL tenders for business
against competitors based in lower cost
economies. The Groups revenue is highly
sensitive to economic conditions and, in
particular, UK consumer condence.
The airline industry is currently heavily
regulated, with expected increased regulator
intervention; this includes environmental,
security and airport regulation in which
changes are levied by regulator decision
rather than by commercial negotiation. This
could have an adverse impact to the Groups
reputation, cost base and market share.
The Group is subject to regulation across its
network, including the Civil Aviation Authority
(CAA) which issues an ATOL licence to certain
Group companies which is required in order
for the Group to operate. This licence is
renewed annually in September subject to
assessments of tness and nancial criteria,
the broad framework for which is available
via the CAA website (www.caa.co.uk).
The Groups business can also be afected
by macro-economic uncertainty outside
of its control such as weakening consumer
condence, inflationary pressure or currency
volatility. This could give rise to adverse
pressure on revenue, load factors and residual
values of aircraft, which the Group mitigates
through regular monitoring of markets and
route performance. Other issues that can
adversely impact performance include
pandemics, environmental factors, safety and
security incidents, and industrial disputes.
Going concern
The Groups business activities, together
with the factors likely to afect its future
development, performance and position are
set out in the above section. As highlighted in
the Principal Risks and Uncertainties section
above, the Group is required to maintain
an ATOL licence in order to operate.
28
The Monarch Group
ANNUAL REPORT 2012
Board of Monarch Holdings Limited
1
3
2
4
29
The Monarch Group
ANNUAL REPORT 2012
1. Iain Rawlinson
Executive Chairman
Iain Rawlinson joined Monarch as Executive
Chairman in 2009, bringing some 25 years
experience in banking and investment, gained
with Lazard Brothers, Robert Fleming and
Fleming Family and Partners.
Iain read law at Cambridge and was called
to the Bar in 1981. After joining Lazard
Brothers in 1986, from 1995 to 2000 he
was responsible for building and managing
Flemings investment banking presence
in Southern Africa.
In 2000 he became Chief Operating Ofcer of
Fleming Family and Partners, the Fleming
family investment business, and until 2005
held various senior executive and advisory
positions in this group.
Since 2005 he has focused on independent
commercial and charitable interests, many
with a leadership role in business building
or transformation. He is responsible for the
overall leadership of The Monarch Group.
He is Chairman of Tusk, the UK charity focused
on conservation, communities and education
in Africa, and other philanthropic activities.
2. Robert Palmer
Group Finance Director
Robert Palmer was appointed as Group
Finance Director in April 2012.
Robert, who has previously served as Group
Financial Controller of easyJet, Chief Financial
Ofcer at British Midland International and also
with Air Malta, brings a wealth of airline industry
expertise to the Group, which he joined in a
consulting capacity in September 2011 in a role
focusing on the delivery of the turnaround plan.
His senior FTSE 250 and IPO experience
underpins a demonstrated track record leading
change in businesses, driving efciency and
productivity through technical expertise
and commercial acumen, as well as nancial
management and reporting disciplines.
3. Sir Roy McNulty
Non-Executive Director
Sir Roy McNulty was appointed to the Board
of Gatwick Airport as a Non-Executive
Director in March 2011 and became Chairman
on 1 April 2013. He is currently Deputy
Chairman of the Olympic Delivery Authority.
He was Executive Chairman of National
Air Trafc Services Ltd (NATS) from 1999
to 2001 and subsequently Chairman
of the Civil Aviation Authority, the UKs
aviation regulator, from 2001 to 2009.
Previously Sir Roy was Chief Executive and
latterly Chairman of Short Brothers plc, the
Belfast-based aerospace company now part
of Bombardier Aerospace, and was Chair of
Advantage West Midlands from 2009 to 2012.
4. Austin Reid
Non-Executive Director
Austin Reid was one of the architects of
British Midland International (bmi) and
served from 1985 as Finance Director
and was Managing Director and Chief
Executive from 1995 to 2005.
As Chief Executive of bmi, he drove the
strategic direction of the airline in route
expansion, helping to transform bmi into
a major European carrier. He began his
career with KPMG in New York. In 1975, he
joined Hertz Corporation, where he rose
to become Vice President of Finance for
Europe, the Middle East and Africa. He is
currently a Non-Executive Director of SR
Technics and brings a wealth of airline and
regulatory experience to the Board. In
January 2013 he was appointed to the Board
of Air Berlin as a Non-Executive Director.
30
The Monarch Group
ANNUAL REPORT 2012
Group Management Board
1
4
7
10
2
5
8
11
3
6
9
12
13
31
The Monarch Group
ANNUAL REPORT 2012
6. John Romo
Managing Director, First Aviation
Joined the Company in 2004 as General
Manager of First Aviation. Over 20 years
experience in aviation, of which over 10
years were in sales and management.
7. Alan MacLean
Managing Director, Cosmos Tours and Cruises
Joined Cosmos in January 2009 as Managing
Director for Cosmos Tours and Cruises
and Specialist products. Prior experience
includes the UK operation of sister cruising
company Avalon Waterways, Shearings,
Sunworld, Thomas Cook and Saga Holidays.
8. Stuart Jackson
Group Business Development and
Distribution Director
Responsible for the development and
deployment of Group strategy in relation to the
optimisation of all distribution channels across
all Group product and brand streams. Over
25 years experience in the travel industry.
9. Pauline Prow
Group HR Director
Joined Monarch in June 2009 initially as
HR Director for the Airline and Engineering
businesses, before moving to the expanded
Group HR Director role in May 2010.
Prior to joining Monarch, Pauline spent
30 years in the automotive sector with
General Motors, where she held a range of
senior HR management roles. Pauline is
Chairman of The Monarch Foundation.
10. Richard Roth
Group Performance and Turnaround Director
Appointed in June 2012. 25 plus years senior
management experience in nancial,
commercial and operational areas, the last 13
of which have been within the airline industry.
11. John Marray
General Counsel and Company Secretary
Appointed in September 2011.
Responsibility across all legal, governance
and company secretarial matters.
12. Chris Dare
Group Information Services Director
Joined Monarch in October 2011 as
Group Information Services Director,
and is responsible for managing all IT
requirements across the Group.
13. Paul Barker
Group Head of Corporate Communications
and IR
Joined The Monarch Group in June 2012.
Over 15 years director-level corporate
communications and investor relations
experience including publicly listed, high-
prole consumer-facing businesses.
1. Iain Rawlinson
Executive Chairman
Joined Monarch as Executive Chairman in
2009, bringing some 25 years experience
in banking and investment, gained
with Lazard Brothers, Robert Fleming
and Fleming Family and Partners.
2. Robert Palmer
Group Finance Director
Appointed as Group Finance Director
in April 2012. Previously served as
Group Financial Controller of easyJet,
Chief Financial Ofcer at British Midland
International and also with Air Malta.
3. Kevin George
Managing Director, Monarch Airlines
Joined Monarch Airlines in January 2007
as Director of Customer Services. Became
Operations Director in October 2008,
before being promoted to Managing
Director, Airline Operations in July 2010.
Prior to joining Monarch, Kevin spent
11 years with British Airways in a range of
senior commercial management roles.
4. Hugh Morgan
Managing Director, Cosmos Holidays,
Avro and somewhere2stay
Appointed Managing Director of Cosmos
Holidays, Avro and somewhere2stay in July
2010. Brings over 40 years experience
in European inclusive tour travel to his
role. Member of the Board of ABTA,
the UKs leading travel association.
5. Mick Adams
Managing Director, Monarch Aircraft
Engineering
Formerly Maintenance and Operations
Director, with long experience of all
aspects of MRO activity. Appointed
Managing Director of MAEL in 2010.
32
The Monarch Group
ANNUAL REPORT 2012
Corporate structure
The holding company of The Monarch Group
is Monarch Holdings Limited, the principal
subsidiaries of which are Monarch Airlines,
First Aviation Limited and Monarch 2011
Limited. Monarch 2011 is the parent company
of both Monarch Aircraft Engineering and
the Monarch Travel Group (comprising the
tour operating activities of the Group).
Monarch Holdings Limited Board
As the ultimate parent company of The
Monarch Group, the Board of Monarch
Holdings Limited comprises the Executive
Chairman and Finance Director of the Group
and two Non-Executive Directors. Monarch
Holdings Limited has delegated governance
of the day-to-day management of The
Monarch Group to a Management Board
comprising senior executives from the
operating companies of Monarch Airlines,
First Aviation Limited, The Monarch Travel
Group (the tour operating division of the
Group), Monarch Aircraft Engineering and
other senior Group executives representing
Group-wide functions, which is chaired by the
Executive Chairman of The Monarch Group.
The Management Board is empowered by
Monarch Holdings to manage all matters
relating to the day-to-day operation of The
Monarch Group, and certain matters afecting
the management of The Monarch Group are
reserved for consideration by the Monarch
Holdings Limited Board. Each of the Groups
operating companies holds regular Board
meetings attended by the Groups General
Counsel in the capacity of Company Secretary
of each of these companies. Matters which
have a Group dimension are escalated to the
Management Board of the Group or the Board
of Monarch Holdings for consideration.
Governance
Signicant contracts
All signicant contracts entered into by any
of the Groups operating companies are
formally reviewed by a Contracts Review
Board (CRB) comprising senior executives
of the Group and the relevant operating
company. A focus of the CRB is on the
identication and mitigation of commercial
and legal risk to The Monarch Group.
Risk management
Each of the Groups operating companies
has a register of Principal Risks and
Uncertainties, which is continually updated
and is subject to a formal monthly review by
the operating company Board. These risks
are also documented in a Group risk register
which is formally reviewed at the monthly
meeting of the Group Management Board.
Corporate governance
Iain Rawlinson
Executive Chairman
33
The Monarch Group
ANNUAL REPORT 2012
Monarch Holdings Limited
Group Management Board
Monarch
Aircraft
Engineering
Retail and Online Tour Operations Monarch Airlines
Avro somewhere2stay Cosmos Holidays First Aviation
Group Finance Director
Group Business Development
and Distribition Director
Group Director of Performance
and Turnaround
Group HR Director Executive Chairman
Group Head of Corporate
Communications and IR
General Counsel and
Company Secretary
Group IT Director
Managing Director
Monarch Airlines
Managing Director
First Aviation
Managing Director
Tour Operations
Head of Retail and Online
Managing Director
Engineering
Conflicts of interest
Directors are required at each Board meeting
to declare any conflicts of interest, whether
between the operating companies of The
Monarch Group or with third parties outside
the Group. Such conflicts are considered
on a monthly basis by the Boards of each
of the Groups operating companies and
are formally documented in Board minutes
produced by the Company Secretary.
Additionally, a senior Director of the Group is
tasked with identifying and documenting within
a Conflict of Interests Register any conflicts
of interest within the Group, which are then
reported to and formally considered by the
Group Management Board. In exceptional
circumstances, these may be escalated to the
Board of Monarch Holdings for consideration.
Committees
Management Board
The Groups Management Board is responsible
for day-to-day activities of the Group,
and is described in the chart above.
Remuneration Committee
The Remuneration Committee of the
Board of Monarch Holdings Limited
comprises the Group Executive Chairman
and two Non-Executive Directors of
the Board. The Committee is chaired
by a Non-Executive Director.
The Remuneration Committee is authorised
on behalf of the Main Board to determine and
agree the framework or broad policy for the
remuneration, including expenses and pension
arrangements, of the Groups Executive
Chairman, the Executive Directors, the
Company Secretary and such other members
of the executive management team as it is
designated to consider. The remuneration of
Non-Executive Directors is a matter for the
Chairman and the executive members of the
Main Board. No Director or manager is involved
in any decisions as to their own remuneration.
Remuneration policy takes into account
all factors which the Committee deems
appropriate, including relevant legal and
regulatory requirements, the provisions
and recommendations of the UK Corporate
Governance Code and associated guidance.
The Committee has full authority to appoint
remuneration consultants and to commission
or purchase any reports, surveys or information
which it deems necessary, within budgetary
parameters determined by the Main Board.
The objective of remuneration policy is
to ensure that members of the executive
management of the Group are provided with
appropriate incentives to encourage enhanced
performance and are, in a fair and responsible
manner, rewarded for their individual
contributions to the success of the Group.
Audit Committee
The Audit Committee of the Board of
Monarch Holdings Limited comprises the
independent Non-Executive Directors of the
Company. The Group Finance Director and a
representative of the external auditors attend
meetings at the invitation of the Committee.
The Committee is authorised by the Main
Board to investigate any activity within its
terms of reference, to seek any information
that it requires from any employee of the
Company and to obtain outside legal or
independent professional advice and such
advisers may attend meetings as necessary.
The responsibilities of the Committee are, in
respect of the external auditor, to oversee
the process for its selection, assess its
independence, recommend the audit fee to the
Main Board and pre-approve fees in respect
of non-audit services provided by the external
auditor and to review its management letter
and managements response. The Committee
reviews the Companys procedures for handling
allegations from whistleblowers, managements
reports on the efectiveness of systems for
internal nancial control, nancial reporting
and risk management. The Committee
also provides review and challenge, where
necessary, for the actions and judgements
of management in relation to the Companys
nancial statements and nancial reporting.
Corporate structure Management Board
34
The Monarch Group
ANNUAL REPORT 2012
The Monarch Foundation
A force for good
Group generosity
A wide range of generous activity takes place
each year across The Monarch Group. Over
the last two years some 500,000 has been
raised in money and donations in-kind from
a variety of activities. This includes customer
donations made on board Monarch Airlines
flights and through Cosmos Holidays online
booking path, and fundraising activities
initiated by the Groups employees.
This charitable engagement has delivered
excellent results for The Monarch Group
and our charity partners and is something
that the Group can be proud of.
A stronger commitment
The Group recognises that industry more
widely has the capacity, and the responsibility,
to make a variety of important social
responsibility impacts externally and, therefore,
has a responsibility to be an efective corporate
citizen in the communities where it operates
and beyond. The size and nature of the Group
is such that, through better coordination of its
charitable activity, it should be in a position to
make an even more efective commitment to
a wider range of charities. At the same time,
the Groups brand values can be positively
reinforced to its millions of customers.
The Monarch Foundation was launched in
spring 2013 as an internal entity to organise
all of the charitable activity that is carried on
by the Group and in the Groups name. It is
intended that The Monarch Foundation will
ultimately become a dening positive aspect
of the Groups businesses and brands.
Our causes
In consultation with the Charities Group,
comprising representatives from across the
Group, The Monarch Foundation has given
consideration to the charitable areas that
are most relevant to the business activities of
The Monarch Group and its brands, and which
the Group should support for the immediate
term from both its own resources and, where
employees are involved, through activities
carried out in the name of the Group. During
the initial establishment phase of The Monarch
Foundation in 2012/13, the Charities Group
has identied ve main causes on which The
Monarch Foundation will focus its eforts
and be the dening areas of all charitable
engagement carried out in the Groups name:
disadvantaged families;
children and young people;
education;
environment and sustainability; and
injured military service people and
their families.
Charity partners 2013
Macmillan Cancer Support
www.macmillan.org.uk
When You Wish Upon A Star
www.whenyouwishuponastar.org.uk
Children in Need
www.bbc.co.uk/programmes/b008dk4b
Home-Start UK
www.home-start.org.uk
Toe in the Water
www.toeinthewater.org
The Homeless World Cup
www.homelessworldcup.org
Dick Camplin Education Trust
www.facebook.com/DickCamplinEducationTrust
Monarch Airlines has proudly supported
Macmillan Cancer Support for 24 years,
raising a total 3.8 million, principally
through the collection of passengers
on-board donations and supporting
Macmillans annual fundraising event,
the Worlds Biggest Cofee Morning.
www.pennies.org.uk
Monarch Airlines and Cosmos are
partnering with Pennies, the electronic
charity box which collects charitable
donations from our customers when
they purchase flights and holidays
online. These generous donations
benet the charities supported by
The Monarch Foundation.
35
The Monarch Group
ANNUAL REPORT 2012
2013 Charity Partners
The Monarch Foundation continues to work
with the Groups existing charity partners,
Macmillan and the childrens charity When You
Wish Upon A Star, and has selected ve new
charities which it will partner with from 2013.
The Monarch Foundations 2013 Charity
Partners are:
Macmillan Cancer Support improving the
lives of people afected by cancer.
When You Wish Upon A Star specialising
in making dreams come true for children
with life-threatening illnesses.
Children in Need providing grants to over
2,500 projects in the UK which focus on
children and young people who are
disadvantaged .
Home Start UK helping families with
young children deal with whatever life
throws at them.
Toe in the Water inspiring service men and
women who have sustained often traumatic
injuries to move beyond their disability and
to become reinspired by life.
Dick Camplin Education Trust providing
scholarships for nancially disadvantaged
students, who have gained places at
university having attended Salford City
College or Loreto College in Manchester.
The Homeless World Cup using the power
of football to energise homeless people so
they can change their own lives.
Currencies for engagement
The Monarch Foundation is supporting
these charities by using a range of resources
at the disposal of The Monarch Group:
Money and nancial support
Skills transfer
Benets in kind
Volunteering
Ambassadorship
Networking through a Charities Forum.
Employee engagement
The Groups employees are encouraged
to continue their engagement with the
wider charitable sector and in 2013 a
limited number of Matching Grants of up
to 1,000 are available where there is a
direct and relevant association with the ve
charitable causes mandated by The Monarch
Foundation. These activities additionally
benet from promotion across the Groups
internal communications channels.
Long-term potential
Over the longer term, The Monarch
Foundation has the potential to become
an important positive aspect of the Groups
businesses and brands, acting as a force
for good in the communities where The
Monarch Group operates, and engendering
among its employees and millions of
customers a strong sense of loyalty and
achievement in the association with efective
and responsible charitable activities. The
Monarch Foundation enables the Group to
do what it should be doing in the charitable
sector, which is everything it can.
In April 2013, Monarch Airlines Captain Peter Clark undertook an 80km trek across
a section of the Great Wall of China to raise funds for Help for Heroes, a charity for
injured service people and their families, one of the ve important causes supported
by The Monarch Foundation. The Foundation donated 1,000 to this challenge,
helping Peter Clark to raise a total of approximately 4,000 for Help for Heroes.
36
The Monarch Group
ANNUAL REPORT 2012
Corporate responsibility
Our industry
Safety is our priority
As a leading provider of airline capacity and
aircraft engineering, the Groups primary
objective is the maintenance of the highest
possible levels of operational safety. It is
essential that the Groups customers have
absolute condence in their safety when
they choose to fly with Monarch Airlines.
Safety considerations will always take
precedence over other aspects of
Monarch Airlines business. Awareness
and diligence by every member of staf
is encouraged to ensure maintenance
of the required standards. Monarch is
committed to a process of continuous
review and improvement of its methods of
management, aircraft maintenance and
operation. In this way, it ensures that the
highest standards of safety and regulatory
compliance are consistently achieved.
Monarch afords the highest priority to the
safety of its passengers. It is regulated by the
UK Civil Aviation Authority (CAA) which issues
the companys Air Operators Certicate (AOC).
The Monarch Group is fully committed
to a programme of working
collaboratively with its communities,
people and industry to make a positive
diference and be a force for good.
The Groups goal is to maintain the
highest possible levels of operational
safety, and at every level it has a
responsibility to ensure that the trust
customers place in it is justied.
The Group takes its environmental
impacts seriously, and it takes care of its
business by managing the resources it
uses efectively.
The UK airline industry has moved in recent
years to the European Joint Aviation
Regulations standards (JAR-OPS). Monarch
was one of the rst airlines to be issued
with a JAR-OPS Air Operators Certicate
in November 1997. As part of JAR-OPS,
Monarch was one of the rst airlines to
introduce a Flight Operations Quality
System, which ensures the maintenance of
the highest operational safety standards.
Key memberships and afliations
Through membership and afliation to key
industry organisations, the Group aims to
promote an environment that is benecial
to the safety and efciency of civil aviation
and responsible tour operations. The Group
is a member of the International Air Carrier
Association (IACA), British Air Transport
Association (BATA), ABTA and ATOL.
Monarch Aircraft Engineering is an approved
maintenance, design authority and training
organisation which is certied by a number
of worldwide airworthiness authorities.
37
The Monarch Group
ANNUAL REPORT 2012
Environment
Commitments
The Group strives to improve its environmental
performance with the objective of ensuring that
its activities contribute to the sustainable
development of the communities where
it operates.
The Group has a commitment to:
comply with and wherever possible exceed
all relevant environment legislation;
set environmental objectives, monitor
environmental performance and aim for
continuous improvement;
seek to minimise emissions, reduce waste
and recycle as much as possible;
actively engage and communicate with
its employees on the means of achieving
these commitments;
endeavour to purchase from suppliers who
share a concern for the environment and
whenever possible purchase and use
recyclable products or products from
sustainable sources; and
maintain a quality waste management
system to reduce the costs of waste disposal
and protect the environment for the future.
Sustainable aviation
The Group has been involved in the Carbon
Trusts Action Energy initiative to reduce
carbon emission, and has participated in
energy-saving surveys carried out by a Carbon
Trust-nominated consultant and provided
the data and platform on which to build a
programme for continuous improvement.
The Group joined the EU Emissions Trading
Scheme in January 2012. Initial emissions
allowances allocated will be 97 per cent of
total emissions in 2010. Operators who exceed
this allowance will be required to purchase
extra allowances in the carbon market. 85
per cent of allowances will be issued free.
Between 1990 and 2005, the Group improved
its fuel efciency by 20.9 per cent, which was
achieved by the addition of new fuel-efcient
aircraft within its fleet and through a series of
modications to ground and flying procedures.
By the end of 2015 the Groups target is to
improve by a further 6.8 per cent, which will
equal a cumulative total of 27.6 per cent.
This will be achieved through fuel efciency
through a programme of fleet modernisation
and further operating efciencies.
Five-year-old flight enthusiast Joshua
Anderson enjoyed a day in the life of
Monarch in December 2012.
In 2013, Monarch Airlines became the rst UK airline to operate aircraft tted with
Airbus Sharklets, designed to save fuel and reduce carbon emissions.
38
The Monarch Group
ANNUAL REPORT 2012
Monarch Airlines is also a participant in
the UK initiative Sustainable Aviation,
which is a grouping of airlines, airports,
manufacturers and air trafc control
with the aim of responding to the
challenge of building a sustainable
environmental future for the industry.
Sustainable tourism
The Group believes that it should promote
responsible travel to help the tourism industry
to reduce its impact on the environment and
local culture, while helping to generate income
and employment for local people.
The Groups Tour Operation division aims to
provide a tourism experience which benets its
guests, suppliers and the destinations in which
it operates.
Corporate responsibility
continued
132
Participants in Lead to Succeed
management programme in 2012
Lead to Succeed is at the heart of the
Groups people strategy.
In pursuit of the above, the Groups
commitment is to:
promote and communicate local traditions,
lifestyles and heritage to guests and
employees;
support communities by abiding by local,
national and international laws,
discouraging illegal, abusive or exploitative
forms of tourism; and
care for the environment by conserving
landscapes, plants, animals and protected
areas and by encouraging guests and
employees to take a responsible approach
in their use of natural resources.
The Group aims to make lives better for
its teams and communities through
learning and development programmes
and community initiatives.
The Group recognises that its
customers care, and that it too should
strive to make a positive diference
by ofering trusted products and
informed decisions.
39
The Monarch Group
ANNUAL REPORT 2012
People
Unied vision and values
The Monarch Groups vision is to be the
customers choice for outstanding service
and value, and this vision is at the heart
of everything it does and it is what drives
people across the Groups businesses.
The Group and its people operate to
ve core values, which are: passionate,
meticulous, brave, responsive and candid.
The Monarch Group strives to attract the right
people with the right skills and the drive to make
its vision a reality and to bring its values to
life. The Group employs some 2,900 talented
people across a diverse range of roles located
in a number of bases and locations across the
UK and beyond, all focused on providing high-
quality travel products and supporting services
combined with superior customer service.
People strategy
The Groups recruitment processes aim to
identify the people who possess the potential
to add the most value to its businesses. A
comprehensive candidate selection and
recruitment process is complemented by
an in-depth induction for all new joiners,
making each new member of the Groups
teams fully aware of The Monarch Groups
work ethos, vision, mission and values.
Learning and development
The Group operates in a changing
environment, and is focused on creating
a culture which equips its leaders with the
skills to drive business transformation.
During 2012, 132 leaders across the Group
embarked on the rst phase of Lead to
Succeed, a management development
programme tailored to the needs of the
Group and its change priorities. This initiative
is part of a wider learning and development
framework which focuses on key aspects of
the people strategy, including the retention
of talented employees, the maintenance of
professional standards, the development of
a pipeline of new talent, increasing internal
mobility and creating an engaged workforce.
Engagement and communication
The Monarch Groups employees work
across a number of locations and
countries and consistent communication
and engagement is a priority.
Monarch Aircraft Engineering opened its new, state-of-the-art training academy
in January 2013.
During 2012, all of the Groups bases and
head ofce locations participated in focus
group research to nd out more about
what employees want to hear from the
Groups businesses and how and when. The
purpose of this is to shape a new internal
communications strategy for the Group,
which is being implemented during 2013.
A Group-wide Intranet serves as a one-
stop shop for news and information from
all the Groups businesses, and provides
essential forms and policies to employees.
Complementing this is a bi-weekly e-newsletter
focusing on the achievements and dedication
of the Groups people and keeping the entire
company up to date with new products,
services and supporting initiatives.
The Groups people enjoy a range of attractive
benets, including pension plans and a variety
of travel-related discounts and ofers.
As part of the Groups overall commitment
to stakeholder engagement, close
working relationships are maintained
with union representatives, pension
trustees and charitable partners.
40
The Monarch Group
ANNUAL REPORT 2012
Independent auditors report to the members of
Monarch Holdings Limited
We have examined the summary nancial statement for the year ended
31 October 2012 which comprises the Consolidated Prot and Loss
Account, Consolidated Statement of Total Recognised Gains and
Losses, Consolidated Balance Sheet, Consolidated Cash Flow Statement
and the related notes 1 to 28.
This report is made solely to the companys members, as a body, in
accordance with section 427 of the Companies Act 2006. Our work has
been undertaken so that we might state to the companys members
those matters we are required to state to them in an auditors report and
for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the company and
the companys members as a body, for our audit work, for this report, for
our audit report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
The directors are responsible for preparing the annual report in
accordance with applicable United Kingdom law.
Our responsibility is to report to you our opinion on the consistency of
the summary nancial statement within the annual report with the full
annual nancial statements and the Directors Report, and its
compliance with the relevant requirements of section 427 of the
Companies Act 2006 and the regulations made thereunder.
We also read the other information contained in the annual report as
described in the contents section, and consider the implications for our
report if we become aware of any apparent misstatements or material
inconsistencies with the summary nancial statement.
We conducted our work in accordance with Bulletin 2008/3 issued by
the Auditing Practices Board. Our report on the companys full annual
nancial statements describes the basis of our opinion on those
nancial statements and on the Directors Report.
Opinion
In our opinion, the summary nancial statement is consistent with the full
annual nancial statements and the Directors Report of Monarch
Holdings Limited for the year ended 31 October 2012 and complies with
the applicable requirements of section 427 of the Companies Act 2006,
and the regulations made thereunder.
We have not considered the efects of any events between the date on
which we signed our report on the full annual nancial statements (29
April 2013) and the date of this statement.
Deloitte LLP
Chartered Accountants and Statutory Auditors
St Albans, United Kingdom
28 May 2013
41
The Monarch Group
ANNUAL REPORT 2012
Note
2012
000
2011
000
Turnover 1, 2 825,148 757,765
Cost of sales (767,525) (720,632)
Gross prot 57,623 37,133
Administrative expenses (including 11.5m (2011: nil) relating to impairment of A320 aircraft
and nil (2011: 11.6m) relating to impairment of A321 aircraft) (83,392) (92,161)
Other operating income 435 927
Operating loss 4 (25,334) (54,101)
Prot on sale of tangible xed assets 202
Loss on disposal of xed asset investment (7,460)
Net nance charges 5 (8,270) (8,666)
Loss on ordinary activities before taxation 2 (33,402) (70,227)
Tax credit on prot on ordinary activities 6 7,259 20,887
Loss for the nancial year (26,143) (49,340)
All amounts relate to continuing activities.
Consolidated prot and loss account
For the year ended 31 October 2012
42
The Monarch Group
ANNUAL REPORT 2012
Consolidated statement of total recognised gains and losses
For the year ended 31 October 2012
Note
2012
000
2011
000
Loss for the nancial year (26,143) (49,340)
Actuarial loss relating to the pension scheme 20 (42,564) (174)
Deferred tax charge in relation to the pension scheme due to rate change (3,642) (2,743)
Deferred tax credit in relation to the pension scheme due to movement in year 10,633 59
Deferred tax in relation to the rate of tax change (169) (169)
Deferred tax adjustments in respect of estimates made in prior years (1,911)
Deferred tax origination and reversal of timing diferences (2,037)
Other reserves (11)
Total recognised gains and losses relating to the nancial year (61,896) (56,315)
43
The Monarch Group
ANNUAL REPORT 2012
Note
2012
000
2011
000
Fixed assets
Intangible assets 8 4,296 5,043
Tangible assets 9 156,492 179,190
160,788 184,233
Current assets
Stocks 11 4,336 4,300
Debtors due within one year 12 152,191 147,176
Debtors due after one year 12 13,067 9,330
Investments 13 51,578 16,645
Cash at bank and in hand 49,858 40,584
271,030 218,035
Creditors: amounts falling due within one year 14 (147,220) (103,553)
Net current assets 123,810 114,482
Total assets less current liabilities 284,598 298,715
Creditors: amounts falling due after more than one year 15 (5,544) (20,690)
Provisions for liabilities 16 (40,336) (55,057)
Accruals and deferred income (240,215) (219,910)
Net liabilities/assets excluding pension liability (1,497) 3,058
Net pension liability 20 (140,211) (102,870)
Net liabilities including pension liability 2 (141,708) (99,812)
Capital and reserves
Called up share capital 17, 21 20,050 50
Merger reserve 21 4,963 4,963
Prot and loss decit 21 (166,721) (104,825)
Total shareholders decit 21 (141,708) (99,812)
The nancial statements of Monarch Holdings Limited, registered number 01165001, were approved by the Board of Directors and authorised for
issue on 29 April 2013.
They were signed on its behalf by
D I Rawlinson R Palmer
Director Director
Consolidated balance sheet
31 October 2012
44
The Monarch Group
ANNUAL REPORT 2012
Company balance sheet
31 October 2012
Note
2012
000
2011
000
Fixed assets
Investments 10 33,398 61,537
Intangible assets 8 35,000 35,000
68,398 96,537
Current assets
Debtors due within one year 12 151 277
due after more than one year 12 2,000 2,000
Investments 13 10,000
12,151 2,277
Creditors: amounts falling due within one year 14 (41,353) (61,199)
Net current assets (29,202) (58,922)
Total assets less current liabilities 39,196 37,615
Creditors: amounts falling due after more than one year 15 (10,925) (10,925)
Net assets 28,271 26,690
Capital and reserves
Called up share capital 17, 21 50 50
Prot and loss account 21 28,221 26,640
Total shareholders funds 21 28,271 26,690
The nancial statements of Monarch Holdings Limited, registered number 01165001, were approved by the Board of Directors and authorised for
issue on 29 April 2013.
They were signed on its behalf by
D I Rawlinson R Palmer
Director Director
45
The Monarch Group
ANNUAL REPORT 2012
Note
2012
000
2011
000
Net cash inflow from operating activities 23 32,611 18
Returns on investments and servicing of nance
Interest received 597 332
Interest paid (2,363) (4,425)
Finance lease and hire purchase interest 5 (146) (128)
Net cash outflow from returns on investments and servicing of nance (1,912) (4,221)
Taxation
UK corporation tax received/(paid) 1,791 (328)
Capital expenditure and nancial investments
Payments to acquire tangible xed assets (11,227) (44,867)
Receipts from sales of tangible xed assets 7,612 84,644
Net cash (outflow)/inflow from capital expenditure and nancial investments (3,615) 39,777
Net cash inflow before management of liquid resources and nancing 28,875 35,246
Management of liquid resources
(Increase)/decrease in restricted deposits (34,933) 22,138
Net cash (outflow)/inflow from management of liquid resources (34,933) 22,138
Financing
New nance leases 4,954
Capital element of nance lease payments (684) (5,670)
Shareholder loans received 20,000
Bank loan repayments (3,984) (57,021)
Issue of preference shares 20,000
Net cash inflow/(outflow) from nancing 15,332 (37,737)
Increase in cash in the year 24, 25 9,274 19,647
Consolidated cash flow statement
Year ended 31 October 2012
46
The Monarch Group
ANNUAL REPORT 2012
Notes to the nancial statements
Year ended 31 October 2012
1. Accounting policies
The principal accounting policies adopted are described below. They have all been applied consistently throughout the current and preceding
nancial year.
Basis of accounting
The nancial statements are prepared under the historical cost convention, with exception of the revaluation of other xed asset investments,
and in accordance with appropriate United Kingdom accounting standards.
Basis of preparation
The Groups business activities, together with the factors likely to afect its future development, performance and position are set out in the Financial
Review. The Financial Review also describes the nancial position of the Group; its cash flows, liquidity position and borrowing facilities; the Groups
objectives, policies and processes for managing its capital; its nancial risk management objectives; details of its nancial instruments and hedging
activities; and its exposure to credit risk and liquidity risk.
The Group meets its day-to-day working capital requirements through a combination of operating cash flows, sale and leaseback arrangements
and shareholder facilities. The shareholder facilities were extended during the year for the period from 1 May 2012 to 31 October 2014. The Directors
have considered the uncertainties presented by current economic conditions in relation to demand and pricing, inflation, foreign exchange rates
and the ability to raise nance in the foreseeable future.
The Groups forecasts and projects, taking into account reasonably possible changes in trading performance, show that the Group should be able to
trade using operating cash flows for at least 12 months from the signing date of these accounts. This forecast is based on budget and experience of
prior years, adjusting for known changes, although the nature of the industry and the market make it difcult to be precise about possible outcomes.
The Board has completed a sensitised review of the budget and believes that there is sufcient headroom using its available resources.
The Directors have a reasonable expectation that the Company and Group have adequate resources to continue in operational existence for the
foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual nancial statements.
As highlighted in the Financial Review, the Group is required to maintain an ATOL licence in order to operate. The Group has held discussions
with the CAA about the ATOL renewal. Based on these discussions, the Groups forecasts, taking into account reasonably possible changes in trading
performance, show that the Group is forecasting to meet the nancial terms expected to be required by the CAA. Accordingly, the Group has
no reason to believe that the renewal will not be granted on acceptable terms using an equivalent basis to previous years. Principal risks and
uncertainties are discussed in more detail in the Financial Review.
The Annual Report and Accounts is a summary of information derived form the annual accounts of the Company, contains additional information
derived form the Directors Report, and does not contain the full text of that report. The full copy of the annual accounts and the Directors Report is
available from Companies House.
Turnover
Airline Division turnover represents the invoiced value of airline trafc revenue and related income exclusive of intra-Group trading, value added tax
and other taxation. Airline trafc revenue is recognised from the date of customer departure. Other related revenue, such as bar sales, is recognised
as revenue at the date that the right to receive consideration occurs. Services invoiced prior to the year end, in respect of customer departures in
future accounting periods, are carried forward as deferred income in the balance sheet.
Engineering Division turnover represents amounts receivable in the normal course of business from engineering services and incidental revenue,
exclusive of value added tax.
Travel Division turnover represents amounts derived from the provision of goods and services which fall within the Groups ordinary activities after
deduction of trade discounts and value added tax. Turnover is recognised from the date of customer departure.
Deferred income and related expenditure
Services invoiced prior to the year end, in respect of customer departures in future accounting periods, are carried forward as deferred income in the
balance sheet. Costs incurred prior to the year end in respect of those services are also deferred until the date of customer departure. Brochure and
promotional costs are charged to the prot and loss account over the season to which they relate where recovery of the costs is reasonably assured.
47
The Monarch Group
ANNUAL REPORT 2012
1. Accounting policies continued
Intangible assets intellectual property rights
Intellectual property assets are stated at cost, and are amortised over a period of 10 years. Provision is made for any impairment.
Intangible assets goodwill
Goodwill arising on the acquisition of subsidiary undertakings and businesses, representing any excess of the fair value of the consideration given
over the fair value of the identiable assets and liabilities acquired, is capitalised and written of on a straight line basis over its useful economic life,
which is 20 years. Provision is made for any impairment.
Intangible assets arising on the purchase of brands are carried at historical cost and are deemed to have an indenite useful economic life, subject
to an annual impairment review, and are therefore not amortised.
Intangible assets carbon allowances
Carbon allowances received free of charge under the EU Emissions Trading Scheme, which became efective for the aviation industry on 1 January
2012, are recognised as intangible assets at market value on the date of receipt. Purchased allowances are also recognised initially at cost (purchase
price) within intangible assets.
Consistent with Statement of Standard Accounting Practice 4 Accounting for Government Grants, the value of allowances received is deferred and
recognised in income on a systematic basis over the period to which the grant relates. The estimated gross cost of settling the liability for CO
2

emitted in the period is recognised in the prot and loss account as incurred.
Tangible xed assets
Tangible xed assets are stated at cost, less accumulated depreciation and any provision for impairment.
Fixed assets are depreciated from the date when available for use at rates estimated to reduce them to their residual values over their estimated
useful lives or the periods of applicable leases. The principal bases used are as follows:
Long leasehold property Straight line over 50 years
Short leasehold property Straight line over term of lease
Aircraft and engines Straight line over 22 years to the relevant residual value
Rotables Net expenditure is written of over a period of up to 22 years to a residual value of 20% of cost
on a straight line basis
Aircraft modications and special work Straight line over periods of up to 22 years. A residual value of 20% of cost is applied in respect
of owned aircraft
Plant and equipment Straight line over 3 to 10 years
Engine overhaul and maintenance costs Amortised on a straight line basis over the period until the next scheduled overhaul
An element of the cost of a new aircraft is attributed on acquisition to prepaid maintenance of its engines and airframe and is amortised over the
period until the next scheduled major overhaul. Subsequent costs incurred which extend the useful life to future periods, such as long-term
maintenance and major overhaul of aircraft and engines, are capitalised as incurred.
Leased aircraft maintenance costs
The Group incurs liabilities for maintenance costs in respect of aircraft leased under operating leases. These arise from the legal and constructive
contractual obligations relating to the condition of the aircraft when it is returned to the lessor. To discharge these obligations, the Group may need
to carry out maintenance work prior to the return of the aircraft to the lessor.
The provisions recorded and charged to the prot and loss account are dependent on the life of the component or maintenance interval used and
the individual terms of the lease. Once the component or maintenance interval has passed the point such that the Group is contractually obliged to
carry out the required maintenance work, a full provision for the related cost is recorded, and a corresponding maintenance asset is recognised
within xed assets. The asset is depreciated over the expected period to the next contractual obligation.
Maintenance deposits paid to lessors, which may be ofset against the eventual cost of maintenance, are recognised as other debtors within the
Group nancial statements until such time as the maintenance work is undertaken.
48
The Monarch Group
ANNUAL REPORT 2012
1. Accounting policies continued
Estimates are required for the likely utilisation and condition of the aircraft and the expected cost of the maintenance check at the time it is expected
to occur. The bases of all estimates are reviewed once each year and, in addition, when there is an indication of a material change to an estimate
arising from a specic event, such as renegotiation of the end of lease return conditions, increased or decreased utilisation, or unanticipated
changes in the cost of heavy maintenance services.
Stock
Stock, including aircraft consumables, and work in progress is valued at the lower of cost and net realisable value. Cost is the original purchase cost.
Provision is made for obsolete or defective items.
Foreign currency
Foreign currency transactions are translated at the rates ruling when they occurred or, if explicitly hedged with a foreign currency forward contract,
and not separately hedged against the cost of an aircraft as described below, at the forward contract rate. Foreign currency monetary assets and
liabilities are translated at the rates ruling at the balance sheet date or, if appropriate, the forward contract rate. Any diferences are taken to the
prot and loss account.
Investments
The Companys investments in subsidiary undertakings are held at cost less any provision for impairment.
Current asset investments are shown at the lower of cost and net realisable value. Cash on deposit is classied as a current asset investment if it is not
available, without penalty, within 24 hours.
Taxation
Current UK corporation tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or
substantially enacted by the balance sheet date.
Deferred taxation is provided in full on timing diferences which result in an obligation at the balance sheet date to pay more tax, or a right to pay less
tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law. Timing diferences arise from the inclusion of
items of income and expenditure in taxation computations in periods diferent from those in which they are included in nancial statements. Deferred
tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered. Deferred tax assets and liabilities are
not discounted.
Leases
Assets held under nance leases and hire purchase contracts are capitalised and are depreciated over their estimated useful lives. Finance costs are
charged to the prot and loss account over the period of the lease or hire purchase contract so as to produce a constant periodic rate of charge on
the remaining balance of the obligation for each accounting period. Amounts payable under operating leases are charged to the prot and loss
account as incurred. Crew training and aircraft introductory costs in respect of aircraft under operating leases are written of as incurred.
Pension costs
Contributions to dened contribution pension schemes are charged to the prot and loss account when payable. Any diferences between the
amounts payable and paid are recorded as either accruals or prepayments on the balance sheet.
The Group operates two dened benet schemes, both of which are closed to new entrants. Past service costs are recognised immediately in the
prot and loss account if the benets have vested. If the benets have not vested immediately, the costs are recognised over the period until the
vesting occurs. The interest cost and the expected return on assets are shown as a net pension funding cost in interest receivable and payable.
Actuarial gains and losses are recognised in the consolidated statement of total recognised gains and losses.
The dened benet schemes are funded, with the assets of the scheme held separately from those of the Group, in separate trustee administered
funds. Pension scheme assets are measured at fair value and liabilities are measured on an actuarial basis using the projected unit method and
discounted at a rate equivalent to the current rate of return on high quality corporate bonds of equivalent currency and term to the scheme
liabilities. The actuarial valuations are obtained at least triennially and are updated at each balance sheet date. The resulting dened benet
schemes assets or liabilities, net of the related deferred tax, are represented separately after other net assets on the face of the consolidated
balance sheet.
Notes to the nancial statements continued
Year ended 31 October 2012
49
The Monarch Group
ANNUAL REPORT 2012
1. Accounting policies continued
Financial liabilities and equity
The Group has not adopted FRS 26 Financial Instruments; Recognition and Measurement. This would require the recognition of nancial
instruments such as open currency and jet fuel hedges on the balance sheet and revaluation to fair value. Instead, commitments relating
to unrecognised gains and losses on derivative transactions are disclosed in note 19 under other nance commitments.
2. Turnover, loss before tax and net liabilities
Group gross and net turnover, loss before tax and net liabilities are analysed as follows:
Gross
turnover
2012
000
Eliminations
2012
000
Net
turnover
2012
000
Gross
turnover
2011
000
Eliminations
2011
000
Net
turnover
2011
000
Description of class of business:
Airline operations 683,531 (174,189) 509,342 620,241 (162,407) 457,834
Engineering services 86,317 (61,952) 24,365 79,286 (58,166) 21,120
Tour operations 589,016 (297,575) 291,441 570,775 (291,964) 278,811
Group 10,395 (10,395) 5,804 (5,804)
1,369,259 (544,111) 825,148 1,276,106 (518,341) 757,765
(Loss)/prot before tax Net (liabilities)/assets
2012
000
2011
000
2012
000
2011
000
Description of class of business:
Airline operations (37,234) (70,128) (18,122) 7,290
Engineering services 5,306 2,898 18,859 16,348
Tour operations 5,581 5,823 (3,196) (3,490)
Group 1,215 (810) 962 (17,090)
Net interest (4,870) (4,531)
FRS 17 adjustment (3,400) (3,479) (140,211) (102,870)
(33,402) (70,227) (141,708) (99,812)
The 37.2m Airline operations loss before tax includes an impairment adjustment of 11.5m on two A320 aircraft and a 6.9m write down of
unrecoverable amounts due to the termination of a maintenance contract for B757 engines on 31 March 2013 which has been reflected in these
nancial statements. In the year ended 31 October 2011 there was an impairment adjustment of 11.6m on two A321 aircraft.
The Group operates two dened benet pension schemes for staf in the airline operations, engineering services and tour operations divisions. The
assets and liabilities of these schemes cannot be split between these divisions. Consequently in the analysis above each division has accounted for
these schemes as dened contribution schemes, and only recognised their contributions payable to the schemes.
2012
000
2011
000
Turnover by origin is analysed by geographical market below:
United Kingdom 812,474 743,478
Europe 6,785 8,967
North America 5,478 4,784
Africa 77 271
Asia 334 265
825,148 757,765
The principal revenue-earning assets of the Group are its aircraft fleet. Since the Groups aircraft fleet is employed flexibly across its route network,
there is no suitable basis of allocating such assets and related liabilities to geographical segments.
50
The Monarch Group
ANNUAL REPORT 2012
2. Turnover, loss before tax and net liabilities continued
The operating loss and loss on ordinary activities before taxation can be analysed as follows:
2012 2011
Operating
loss
000
Loss before
tax
000
Operating
loss
000
Loss before
tax
000
Reported result (25,334) (33,402) (54,101) (70,227)
Impairment of aircraft 11,521 11,521 11,600 11,600
Termination of B757 maintenance contract 6,948 6,948
Loss on sale of aircraft 7,497 7,497
Reported result before impairment of aircraft, termination of maintenance contract
and loss of sale of aircraft tangible xed assets (6,865) (14,933) (35,004) (51,130)
3. Information regarding Directors and employees
2012
000
2011
000
Directors remuneration:
Emoluments 1,417 702
The emoluments of the highest paid Director were: 646 358
The accrued pension of the highest paid Director from the dened benet scheme at 31 October 2012 was nil (2011: nil) per annum.
2012
Number
2011
Number
The number of Directors in a dened benet pension scheme
Average number of employees of the Group during the year, including Directors, was as follows:
Airline operations 1,593 1,744
Engineering services 389 353
Tour operations 302 196
Administrative 563 539
2,847 2,832
2012
000
2012
000
2011
000
2011
000
Staf costs during the year (including Directors):
Wages and salaries 104,128 99,444
Social security costs 12,256 11,410
Pension costs:
FRS 17 service charge 20 81
Amounts included as other nance costs 3,379 4,135
Contributions to money purchase scheme 6,445 5,031
Amounts recognised in statement of total recognised gains and losses 42,564 174
52,408 9,421
168,792 120,275
Notes to the nancial statements continued
Year ended 31 October 2012
51
The Monarch Group
ANNUAL REPORT 2012
4. Prot on ordinary activities before taxation
2012
000
2011
000
Operating loss is after charging:
Loss on sale of tangible xed assets 7,460
Depreciation of tangible xed assets
owned 31,832 36,356
held under nance leases and hire purchase contracts 844 563
Amortisation of intangible assets 747 747
Operating lease rentals plant and machinery 55,851 57,191
other 2,260 2,125
The analysis of auditors remuneration is as follows:
2012
000
2011
000
Fees payable to the Companys auditor for the audit of the Companys annual accounts 26 26
Fees payable to the Companys auditor and their associates for other services to the Group:
The audit of the Companys subsidiaries pursuant to legislation 254 244
Total audit fees 280 270
Non-audit fees
2012
000
2011
000
Tax services 90 97
Other assurance services 59 51
Total non-audit fees 149 148
Fees payable to the Companys auditor and their associates in respect of associated pension schemes:
Audit 12 25
5. Finance charges (net)

2012
000
2011
000
Interest payable and similar charges
Bank loans and overdrafts 5,307 4,715
Finance leases and hire purchase contracts 146 128
5,453 4,843
Investment income
Interest receivable and similar income (562) (313)
Other nance charges
Net nance charges on pension scheme 3,379 4,135
Total net nance charges 8,270 8,666
52
The Monarch Group
ANNUAL REPORT 2012
6. Tax charge on prot on ordinary activities
(a) Tax charge on prot on ordinary activities
2012
000
2011
000
Deferred tax
Origination and reversal of timing diferences (6,543) (18,986)
Adjustment in respect of prior years (353) (410)
Change in efective tax rate 237 (552)
FRS 17 charge (600)
Movement on deferred tax liability note 16 (7,259) (19,948)
Movement on pension deferred tax asset taken to prot and loss account (939)
Total deferred tax charge/(credit) (7,259) (20,887)
Tax charge/(credit) on prot on ordinary activities (7,259) (20,887)
(b) Factors afecting current tax credit for the year
The tax assessed for the period is lower (2011: lower) than the standard rate of corporation tax in the UK of 24.8% (2011: 26.8%). The diferences are
explained below:
2012
%
2011
%
Standard rate of corporation tax 24.8 26.8
Efects of:
Expenses not deductible for tax purposes (4.4) (2.3)
Capital allowances in excess of depreciation (9.1) (10.6)
Movement in short-term timing diferences (0.1) (0.1)
Total prior period adjustments
Tax losses carried forward (9.9) (4.6)
FRS 17 movement (1.8) (1.4)
Consol adjustments with no tax efect 0.5
Taxable foreign exchange in reserves (7.8)
Current tax credit for the year
(c) Factors afecting current tax credit for the year
The Finance Act 2012, which provides for a reduction in the main rate of corporation tax from 24% to 23% efective from 1 April 2013, was
substantively enacted on 3 July 2012. This rate reduction has been reflected in the calculation of deferred tax at the balance sheet date.
The Government intends to enact a future reduction in the main tax rate down to 21% by 1 April 2014. As this tax rate was not substantively enacted
at the balance sheet date, the rate reduction is not yet reflected in these nancial statements in accordance with FRS 21, as it is a non-adjusting
event occurring after the reporting period.
7. Prot attributable to the Company
The prot for the nancial year dealt with in the nancial statements of the parent company was 1,581,000 (2011: 11,000 loss). As permitted
by Section 408 of the Companies Act 2006, no separate prot and loss account is presented in respect of the parent company.
Notes to the nancial statements continued
Year ended 31 October 2012
53
The Monarch Group
ANNUAL REPORT 2012
8. Intangible xed assets
Group
Goodwill
000
Patents/
trademarks
000
Total
000
Cost
At 1 November 2011 and at 31 October 2012 15,854 500 16,354
Amortisation
At 1 November 2011 10,811 500 11,311
Charge for the nancial year 747 747
At 31 October 2012 11,558 500 12,058
Net book value
At 31 October 2012 4,296 4,296
At 31 October 2011 5,043 5,043
Company
Brand
000
Cost
At 1 November 2011 and 31 October 2012 35,000
Amortisation
At 1 November 2011 and 31 October 2012
Net book value
At 31 October 2012 35,000
During the year ended 31 October 2011, the Company acquired the Monarch brand from Monarch Airlines Limited for a total consideration of 35m,
supported by an independent valuation. From 1 November 2011 the Company now receives an annual royalty payment from Monarch Airlines of
0.5% of revenue and from Monarch Aircraft Engineering Limited based on 0.25% of third party revenue.

9. Tangible xed assets
Long leasehold
property
000
Short leasehold
property
000
Aircraft and
engines
000
Rotables
000
Aircraft
modications
and special
work
000
Plant and
equipment
000
Engine
overhaul and
maintenance
costs
000
Total
000
Cost
At 1 November 2011 14,194 7,824 103,971 45,339 25,258 45,453 162,346 404,385
Additions 1 7,868 1,852 1,681 5,868 11,842 29,112
Transfers 2,802 (3,097) (41) 41 295
Disposals (1,098) (21) (631) (16,840) (18,590)
At 31 October 2012 16,997 4,727 111,798 46,093 26,959 50,985 157,348 414,907
Accumulated depreciation
At 1 November 2011 6,241 4,153 63,279 25,341 18,854 36,054 71,273 225,195
Charge for the year 336 239 890 3,642 3,070 2,932 21,568 32,677
Transfers 1,061 (1,097) (14) 12 38
Impairment 9,829 358 1,334 11,521
Disposals (875) (131) (592) (9,380) (10,978)
At 31 October 2012 7,638 3,295 73,984 28,108 22,163 38,432 84,795 258,415
Net book value
At 31 October 2012 9,359 1,432 37,814 17,985 4,796 12,553 72,553 156,492
At 31 October 2011 7,953 3,671 40,692 19,998 6,404 9,399 91,073 179,190
54
The Monarch Group
ANNUAL REPORT 2012
9. Tangible xed assets continued
During the year ended 31 October 2012, the Group did not sell and lease back any aircraft. In the year ended 31 October 2011, ve A321 aircraft with
a net book value of 83,728,000 were sold and leased back. Sale proceeds for the ve aircraft totalled 76,230,000.
At 31 October 2012 an impairment review was performed. This resulted in the write down of 11,521,000 (2011: 11,625,000) in the income statement
of two A320 aircraft (2011: A321 aircraft).
The plant and equipment cost of the Group and Company includes 6,581,000 (2011: 6,665,000) in respect of assets which are subject to hire
purchase and nance lease contracts. The accumulated depreciation of these assets is 2,763,000 (2011: 1,918,000). The related depreciation
charge for the year was 844,000 (2011: 77,000).
The cost of the long leasehold property includes 68,000 (2011: 68,000) of capitalised interest.
Commitments for capital expenditure
Group
2012
000
Group
2011
000
Company
2012
000
Company
2011
000
Contracted for but not provided in the nancial statements
10. Fixed asset investments
Company
Shares in
subsidiary
undertakings
000
Loans to
subsidiaries
000
Total
000
Cost or valuation
At 1 November 2011 48,537 13,000 61,537
Additions
Disposals (28,139) (28,139)
At 31 October 2012 20,398 13,000 33,398
Provisions for impairment
At 1 November 2011 and at 31 October 2012
Net book value
At 31 October 2012 20,398 13,000 33,398
At 31 October 2011 48,537 13,000 61,537
Principal Group investments
The Company and the Group have investments in the following subsidiary undertakings and investments, which principally afected the prots or net
assets of the Group. The principal investments include the following:
Subsidiary undertakings
Country of incorporation
and operation Principal activity Holding %
Avro Limited England and Wales Sale of airline seats 16,100,000 ordinary 1 shares 100
Cosmos Holidays Limited England and Wales Tour operator 25,200,000 ordinary 1 shares 100
Monarch Aircraft Engineering Limited England and Wales Aircraft engineering and maintenance 100,000 ordinary 1 shares 100
Monarch Airlines Limited* England and Wales Airline operator 20,100,000 ordinary 1 shares 100
Monarch Airlines Leasing Limited England and Wales Leasing of equipment 2 ordinary 1 shares 100
Monarch Technical Support Limited England and Wales Engineering and technical services 2 ordinary 1 shares 100
Monarch Travel Group Limited England and Wales Holding company 20,000 ordinary 1 shares 100
First Aviation Limited* England and Wales Charter aircraft broker 25,000 ordinary 1 shares 100
Monarch 2011 Limited* England and Wales Financing 1 ordinary 1 share 100
Monarch Group Management Limited* England and Wales Group recharging 2 ordinary 1 shares 100
* Held directly by Monarch Holdings Limited.
Notes to the nancial statements continued
Year ended 31 October 2012
55
The Monarch Group
ANNUAL REPORT 2012
11. Stocks
Group
2012
000
Group
2011
000
Engineering stock 4,035 4,147
Cabin consumables 301 153
Goods held for resale
4,336 4,300
In the opinion of the Directors, the replacement cost of stocks is not materially diferent to the above amounts for both accounting period ends.
12. Debtors
Group
2012
000
Group
2011
000
Company
2012
000
Company
2011
000
Amounts falling due within one year:
Trade debtors 25,050 45,875
Amounts owed by Group undertakings 151 108
Corporation tax recoverable 183
Other debtors 20,040 6,064 169
Prepayments and accrued income 107,101 95,054
152,191 147,176 151 277
Amounts falling due after more than one year:
Amounts owed by Group undertaking 2,000 2,000
Deposits held by lessors 13,067 9,330
13,067 9,330 2,000 2,000
Total debtors 165,258 156,506 2,151 2,277
13. Current asset investments
Group
2012
000
Group
2011
000
Company
2012
000
Company
2011
000
Restricted cash 51,578 16,645 10,000
51,578 16,645 41,578 16,645
Restricted cash provides security on facilities made available by banks in respect of advanced bookings, security for certain hedging arrangements
and guarantee arrangements.
14. Creditors: amounts falling due within one year
Group
2012
000
Group
2011
000
Company
2012
000
Company
2011
000
Bank loans and overdraft (secured) 14,381 3,988
Shareholder loans (secured; see note 25) 83,858 60,000
Obligations under hire purchase contracts and nance leases 765 684
Trade creditors 32,752 28,245
Amounts owed to Group undertakings 40,707 60,047
Other taxation and social security costs 11,227 7,089 646
Other creditors 4,237 3,547 1,152
147,220 103,553 41,353 61,199
Further details regarding loans, nance leases and hire purchase contracts are shown in note 17. The other loan is secured against certain aircraft
owned by the Group.
56
The Monarch Group
ANNUAL REPORT 2012
15. Creditors: amounts falling due after more than one year
Group
2012
000
Group
2011
000
Company
2012
000
Company
2011
000
Bank loans (secured against certain aircraft) 14,381
Obligations under hire purchase contracts and nance leases 3,114 3,879
Amounts owed to Group undertakings 9,775 9,775
Other loan 1,150 1,150 1,150 1,150
Other creditors 1,280 1,280
5,544 20,690 10,925 10,925
Borrowings repayable in more than ve years
Obligations under hire purchase contracts and nance leases
On demand or within one year (note 14) 765 684
Between one and two years 3,114 765
Between two and ve years 2,460
After ve years 654
3,879 4,563
Amounts owing to Group undertakings
After ve years 9,775 9,775
Other loan
After ve years (see note 25) 1,150 1,150 1,150 1,150
The obligations under nance leases and hire purchase contracts are efectively secured on the assets held under those leases.
The amount owed by the Company to a Group undertaking of 9,775,000 was not interest-bearing during the year (2011: 9,775,000). This amount
is repayable after more than ve years; there are no other terms for repayment.
The other loan is interest free and is repayable after more than ve years. There are no other terms for repayment.
16. Provisions for liabilities
Group
Un-utilised
leasehold
000
Emission
reserves
000
Maintenance
reserves
000
Deferred tax
000
Total
000
At 1 November 2011 1,336 50,462 3,258 55,056
Credit to prot and loss account (210) (6,658) (6,868)
Provisions made in year 4,820 1,530 6,350
Utilised in the year (14,371) (14,371)
Charge to the statement of total recognised gains and losses 169 169
At 31 October 2012 1,126 4,820 37,621 (3,231) 40,336
Notes to the nancial statements continued
Year ended 31 October 2012
57
The Monarch Group
ANNUAL REPORT 2012
16. Provisions for liabilities continued
Deferred taxation
The total potential amount of deferred tax on timing diferences and the amount for which recognition at 23% (2011: 25%) has been made is:
Group
recognised
2012

Group
provided
2011

Tax losses (9,420) (8,481)

Accelerated capital allowances 5,447 10,853
Other timing diferences (592) (563)
Foreign exchange 1,334 1,450
(3,231) 3,259
Un-utilised leasehold
The provision relates to part of a property lease which is currently being marketed for tenants.
Emission reserves
Emission reserves represent a commitment to purchase emissions allowances to meet the requirements of the EU Emissions Trading Scheme, which
became efective for the aviation industry on 1 January 2012. The provision is made for the CO
2
emitted in the period based on emission allowance
utilised. The provision will be utilised at the end of the period when the initial allowance was granted for.
Maintenance reserves
Where the Group has a commitment to maintain aircraft held under operating leases, provision is made during the lease term for the rectication
obligations contained within lease agreements, when the condition of a specic component falls below that specied in the lease. The provisions are
based on estimated future costs of major airframe, certain engine maintenance checks and one-of costs to be incurred at the end of the lease.
17. Called up share capital

2012
000
2011
000
Authorised, called up, allotted and fully paid
50,000 ordinary shares of 1 each 50 50
20,000,000 redeemable preference shares of 1 each 20,000
Under the terms of the 2011 Renancing, on 15 November 2011, Amerald Investments NV (ultimate and immediate parent and controlling party)
provided 40m of funds to Monarch 2011 Limited, a newly incorporated subsidiary of the Group, as additional working capital. The 40m comprised
20m of preference share capital and a 20m loan.
18. Contingent liabilities
Bank guarantees have been made to various suppliers of the Group, including airports, fuel suppliers, ground handling agents, customs agencies
and lessors, totalling 9,547,586 (2011: 13,469,000). These guarantees are in addition to the restricted cash disclosed in note 15 and nancial
commitments disclosed in note 21.
During the year ended 31 October 2009 the Group sold its equity shares and loan stock in Airline Group Limited to the Monarch Airlines Limited
Retirement Benets Plan for 37,000,000. As part of the transaction, the Group agreed to reimburse the pension scheme for any loss incurred
if the equity shares and loan stock are sold for less than the acquisition price. The Directors consider it unlikely that any liability will arise in relation
to this agreement.
During the nancial year the Group paid contributions at 50% of the due rates in line with the Schedule of Contributions into the Monarch Airlines
Limited Retirement Benets Plan. The Group are due to pay the balance of contributions when the Pension Contribution Payback Trigger has been
met. The amount due has been estimated at approximately 633,600.
The Group is involved in various disputes or litigation in the normal course of business. Whilst the result of such disputes cannot be predicted with
certainty, the Company believes that the ultimate resolution of these disputes will not have a material efect on the Groups nancial position
or results.
58
The Monarch Group
ANNUAL REPORT 2012
19. Commitments
Operating leases
At 31 October 2012, the Group had annual commitments under non-cancellable operating leases as set out below:
Aircraft and
engines
000
Land and
buildings
000
Other
000
Total
000
Operating leases which expire:
Within one year 4,509 129 4,638
In the second to fth year inclusive 42,425 490 169 43,084
After ve years 5,186 1,359 1,251 7,796
52,120 1,978 1,420 55,518
At 31 October 2011, the Group had annual commitments under non-cancellable operating leases as set out below:
Aircraft and
engines
000
Land and
buildings
000
Other
000
Total
000
Operating leases which expire:
Within one year 7,627 272 36 7,935
In the second to fth year inclusive 31,846 500 32,346
After ve years 12,066 1,257 741 14,064
51,539 2,029 777 54,345
Other nance commitments
At 31 October 2012, the Group had commitments under xed forward exchange contracts entered into in the ordinary course of business amounting
to 431.4m (2011: 278.6m).
At 31 October 2012, the Group had jet fuel swaps entered into in the ordinary course of business amounting to 173.8m (2011: 177.4m).
At 31 October 2012, the Group and Company had carbon credit swaps entered into in the ordinary course of business to hedge an amount of 5.8m
(2011: nil) of their future carbon credit purchases.
The fair value of derivative transactions entered into to hedge future operating costs is not recognised in the accounts. At 31 October 2012, the
Group had an unrecognised loss on its forward exchange contracts of 5.2m (2011: prot of 0.6m), an unrecognised prot on its jet fuel swaps
of 1.8m (2011: prot of 0.6m) and an unrecognised prot on carbon credit swap was 0.4m (2011: nil).

20. Pension arrangements
For the year ended 31 October 2012, the Group has applied FRS 17 as outlined by the Accounting Standards Board.
Dened contribution schemes
The Group made contributions to the dened contribution scheme of 6.3m (2011: 5.0m). There were outstanding contributions at the year end
of 0.6m (2011: 0.5m).
Dened benet schemes
Monarch Airlines Limited Retirement Benets Plan
Certain subsidiaries operate a jointly funded dened benet pension scheme for UK employees. The assets of the scheme are administered by
trustees and are held in separate funds.
The scheme has been closed to new entrants since 2002 and ceased future benet accruals from 30 April 2010. The benets of certain employees
retain a link to salaries in line with a pre-agreed formula. On 1 March 2011, the remaining Permanent Health Insurance members became members of
a new dened contribution scheme.
Notes to the nancial statements continued
Year ended 31 October 2012
59
The Monarch Group
ANNUAL REPORT 2012
20. Pension arrangements continued
The scheme is subject to a triennial valuation by independent actuaries. A full actuarial valuation was last carried out at 30 June 2010; a summary
of the following position as at 30 June 2010, produced in accordance with the Pensions Act 2004, showed a shortfall in the scheme relative to the
Statutory Funding Objective of 234.8m.
Cosmosair Pension and Life Assurance Scheme
Certain subsidiaries operate a funded dened benet scheme for qualifying employees. The assets of the scheme are held in separate funds.
The scheme is subject to a triennial valuation by independent actuaries with the last full actuarial valuation carried out at 1 June 2009. The
employers contribution rate over the average remaining service lives of the members of the scheme takes account of the surplus disclosed
by the valuation.

The nancial assumptions under FRS 17 used by the actuaries were:
2012 2011
Cosmosair Pension
and Life Assurance
Scheme
Monarch Airlines
Limited Retirement
Benets Plan
Cosmosair Pension
and Life Assurance
Scheme
Monarch Airlines
Limited Retirement
Benets Plan
Rate of increase in salaries 2.60% 2.90% 2.80% 3.30%
Rate of increase for pensions in payment 2.30% 2.83% 2.50% 2.88%
Discount rate 4.00% 4.25% 5.00% 5.00%
Inflation assumption 2.60% 2.65% 2.80% 2.80%
Increase in deferred pension 2.00% 2.00% 2.00% 2.00%
Mortality before retirement
Males PMA92 84% S1PA PMA92 PMA92
Medium Cohort CMI 2010 Medium Cohort Medium Cohort
(Y.O.B.) 1% Per Annum (Y.O.B.) (Y.O.B.)
Females PFA92 95% S1PA PFA92 PFA92
Medium Cohort CMI 2010 Medium Cohort Medium Cohort
(Y.O.B.) 1% Per Annum (Y.O.B.) (Y.O.B.)
Mortality before retirement
Males PMA92 84% S1PA PMA92 PMA92
Medium Cohort CMI 2010 Medium Cohort Medium Cohort
(Y.O.B.) 1% Per Annum (Y.O.B.) (Y.O.B.)
Females PFA92 95% S1PA PFA92 PFA92
Medium Cohort CMI 2010 Medium Cohort Medium Cohort
(Y.O.B.) 1% Per Annum (Y.O.B.) (Y.O.B.)
Weighted average life expectancy to determine
benet obligations:
Member age 65 (current life expectancy):
Males 22.2 23.2 22.2 22.6
Females 25.1 24.4 25.0 25.7
Member age 45 (life expectancy at 65):
Males 23.2 24.6 23.2 24.4
Females 26.0 25.9 26.0 27.8
Assumptions and sensitivities
The Directors have chosen assumptions as at 31 October 2012 which reflect a consistent approach with previous years. Key sensitivities within those
assumptions are as follows:
The discount rate is determined with reference to AA-rated corporate bond yields of appropriate term and currency to the liabilities of the Plan.
This years determination of a 4.25% discount rate used the Markit iBoxx AA 15 year index rate and adjusted it relative to the Bank of England gilt
spot rate for a plan with liabilities of an 18 year duration.
A 0.25% movement in the discount rate would impact liabilities by approximately 20m.
A 0.25% movement in inflation would impact liabilities by approximately 13m.
60
The Monarch Group
ANNUAL REPORT 2012
20. Pension arrangements continued
Expected return on fund assets
The return on bonds and cash has been determined by taking the market values and/or yields on AA corporate bonds and government bonds
applicable at the reporting date. The expected return on equities was set by adding an equity risk premium to the yield available on xed interest
government bonds with a 15 year term as at the balance sheet date.
Reconciliation to balance sheet
The fair value of the assets and the present value of the liabilities in the schemes and the expected rate of return at each balance sheet date were:
Monarch Airlines Limited
Retirement Benets Plan
Monarch Airlines Limited
Retirement Benets Plan
Monarch Airlines Limited
Retirement Benets Plan
2012
%
2012
000
2011
%
2011
000
2010
%
2010
000
Equities 7.00 207,031 7.00 194,966 6.95 204,682
Bonds 4.25 56,481 5.00 56,677 4.65 54,956
Other cash 2.80 1,346 3.10 2,018 0.50 816
Total market value of assets 264,858 253,661 260,454
Present value of scheme liabilities (447,134) (391,069) (394,243)
Decit in the scheme (182,276) (137,408) (133,789)
Related deferred tax asset 41,924 34,352 36,123
Net pension liability on an FRS 17 basis (140,352) (103,056) (97,666)
Cosmosair Pension and
Life Assurance Scheme
Cosmosair Pension and
Life Assurance Scheme
Cosmos Pension and
Life Assurance Scheme
2012
%
2012
000
2011
%
2011
000
2010
%
2010
000
Equities 6.0 994 7.0 1,225 6.7 1,194
Fixed interest and cash 2.8 1,890 3.1 1,746 3.7 1,715
Property 6.0 319 7.0 348 6.7 467
Purchased annuities 4.0 1,171 5.0 1,180 3.7 798
Total market value of assets 4,374 4,499 4,174
Present value of scheme liabilities (3,814) (3,844) (3,433)
Surplus in the scheme 560 655 741
Unrecoverable surplus (376) (407) (413)
Related deferred tax liability (43) (62) (89)
Net pension asset on an FRS 17 basis 141 186 239
2012
000
2011
000
2010
000
Net pension liability:
Net pension liability of Monarch Airlines Limited Retirement Benets Plan (140,352) (103,056) (97,666)
Pension asset of Cosmosair Pension and Life Assurance Scheme 141 186 239
Total net pension liability included in consolidated balance sheet (140,211) (102,870) (97,427)
Analysis of the amount charged to operating prot
2012
000
2011
000
Current service cost 20 81
Notes to the nancial statements continued
Year ended 31 October 2012
61
The Monarch Group
ANNUAL REPORT 2012
20. Pension arrangements continued
2012
000
2011
000
Expected return on pension scheme assets 16,051 16,594
Interest on pension liabilities (19,430) (20,729)
Net charge (note 5) (3,379) (4,135)
Actual return on plan assets 22,862 5,902
Analysis of the amount recognised in the statement of total recognised gains and losses (STRGL)
2012
000
2011
000
Actuarial loss recognised in the STRGL (42,595) (180)
Change in restriction on unrecoverable surplus 31 6
(42,564) (174)
Cumulative loss recognised in the STRGL 90,427 47,817
Movement in net decit during the year
2012
000
2011
000
Changes in benet obligations
Benet obligations at beginning of year 394,913 397,676
Current service costs 20 81
Interest cost 19,430 20,729
Plan participants contributions 4 8
Curtailment benet
Actuarial losses 49,375 (10,466)
Benets paid (12,794) (13,115)
Benets obligations at end of year for plans that are wholly or partly funded 450,948 394,913
Change in plan assets
Fair value of assets at beginning of year 258,160 264,628
Expected return on plan assets 16,051 16,594
Actuarial gains 6,811 (10,692)
Employer contributions 1,000 737
Member contributions 4 8
Benets paid (12,794) (13,115)
Fair value of plan assets at year end 269,232 258,160
Restrictions due to unrecoverable surplus (376) (407)
Net amount recognised (182,092) (137,160)
Represented by:
Monarch Airlines Limited Retirement Benets Plan (182,276) (137,408)
Cosmosair Pension and Life Assurance Scheme 184 248
Net pension decit (182,092) (137,160)
62
The Monarch Group
ANNUAL REPORT 2012
20. Pension arrangements continued
Five year history
2012
000
2011
000
2010
000
2009
000
2008
000
Benet obligation at end of year (450,948) (394,913) (397,676) (382,386) (253,838)
Fair value of assets at end of year 269,232 258,160 264,628 246,448 193,907
Unrecoverable surplus (376) (407) (413) (345) (1,248)
(182,092) (137,160) (133,461) (136,283) (61,179)
Diference between actual and expected return of scheme assets:
Amount (000) 6,811 (10,692) 14,524 32,842 (89,752)
Percentage of schemes assets (%) 2.5% (4.1%) 5.5% 13.3% (46.3%)
Experience gains and losses on scheme liabilities:
Amount (000) (49,375) (9,484) (1,352) (1,837) 2,834
Percentage of schemes liabilities (%) 10.9% 2.4% 0.3% 0.5% (1.1%)

21. Reserves
Group
Called up
share capital
000
Preference
share capital
000
Merger
reserve
000
Prot and
loss account
(decit)
000
Total
2012
000
Total
2011
000
At the beginning of the year 50 4,963 (104,825) (99,812) (43,497)
Issue of preference shares 20,000 20,000
Realisation of revaluation surplus
Loss for the nancial year (26,143) (26,143) (49,340)
Actuarial loss relating to the pension scheme (note 20) (42,564) (42,564) (174)
Deferred tax charge in relation to the pension scheme due
to rate change (3,642) (3,642) (2,743)
Deferred tax credit in relation to the pension scheme due
to movement in year 10,633 10,633 59
Deferred tax in relation to rate of change of tax (169) (169) (169)
Deferred tax adjustments in respect of estimates made
in prior years (1,911)
Deferred tax origination and reversal of timing diferences (2,037)
Other reserves (11) (11)
At the end of the nancial year 50 20,000 4,963 (166,721) (141,708) (99,812)
Company
Called up
share capital
000
Prot and
loss account
000
Total
2012
000
Total
2011
000
At the beginning of the nancial year 50 26,640 26,690 26,701
Prot/(loss) for the nancial year (note 7) 1,581 1,581 (11)
At the end of the nancial year 50 28,221 28,271 26,690
Notes to the nancial statements continued
Year ended 31 October 2012
63
The Monarch Group
ANNUAL REPORT 2012
22. Reconciliation of movements in Group shareholders funds

2012
000
2011
000
Loss for the nancial year (26,143) (49,340)
Other recognised gains and losses relating to the year (35,753) (6,975)
(61,896) (56,315)
Preference shares issued 20,000
Net additions to shareholders funds (41,896) (56,315)
Opening shareholders funds (99,812) (43,497)
Closing shareholders funds (141,708) (99,812)
23. Reconciliation of operating prot/(loss) to net cash inflow from operating activities
2012
000
2011
000
Operating loss (25,334) (54,101)
Prot on sale of xed assets 202
Amortisation intangible xed assets 747 747
Depreciation tangible xed assets 32,677 36,919
Impairment tangible xed assets 11,521
(Increase)/decrease in stocks (36) 5,574
Increase in debtors (22,415) (50,020)
Increase in creditors, pensions and other items 35,249 60,899
Net cash inflow from operating activities 32,611 18
24. Reconciliation of net cash flow to movement in net debt

2012
000
2011
000
Increase in cash in the year 9,274 19,647
Cash used to repay debt 814 57,733
Cash inflow from nancing activities (20,000) (20,000)
Increase/(decrease) in liquid resources 34,933 (22,138)
Change in net debt resulting from cash flows 25,021 35,242
Opening net debt (26,853) (62,095)
Closing net debt (1,832) (26,853)
25. Analysis of net debt
At 1 November
2011
000
Cash flows
000
Non-cash
changes
000
At 31 October
2012
000
Cash at bank and in hand 40,584 9,274 49,858
Bank loans due after one year (14,381) 14,381
Bank loans due within one year (3,988) 3,988 (14,381) (14,381)
Shareholder loans due within one year (60,000) (23,858) (83,858)
Finance leases and hire purchase obligations (4,563) 684 (3,879)
Other loan (1,150) (1,150)
(84,082) (19,186) (103,268)
Current asset investments 16,645 34,933 51,578
Total (26,853) 25,021 (1,832)
64
The Monarch Group
ANNUAL REPORT 2012
26. Related party transactions
Set out below is a summary of related party transactions between:
the Company or subsidiary undertakings of the Company; and
companies or individuals who are related parties of the Company or Group where the transaction or balance is not specically exempted from
disclosure by FRS 8 Related Party Disclosures.
All such transactions have been executed on an arms length basis.
A) Arrangements with companies and individuals related to the ultimate controlling parties
The following transactions and arrangements are with companies or individuals which the Directors believe are owned or controlled by the ultimate
controlling parties as set out in note 26 below in the same or similar proportions as to those holdings in the Group.
Transaction Related party
1 Loan to Monarch Holdings Limited on interest free terms and with no xed terms for repayment.
The amount due to the related party at 31 October 2012 was 1.15m (2011: 1.15m)
Amerald Investments NV as lender.
2 Operating leases to Monarch Airlines Limited of aircraft, engines and rotable components at a cost of
12.3m (2011: 27.3m) in the period. These leases are for periods of between 1 and 12 years at rentals
ranging from 0.5m to 3.8m per annum (2011: 0.5m to 5.9m). The amount due to the lessors at
31 October 2012 was 0.3m (2011: 1.5m)
Various lessors.
3 From 14 October 2011, shareholder-owned aircraft lessors suspended lease payments on eight aircraft
leased by Monarch Airlines. Deferred payments totalled 22m at 31 October 2012.
Various lessors.
4 Provision of insurance and insurance services to the Group in respect of the aircraft fleet, property,
and motor vehicles amounting to 4.9m (2011: 6.2m) in the year. The amount due to the related
party at 31 October 2012 was 3.3m (2011: 3.9m). There were also amounts due from Voyager to
Monarch Airlines Limited to the value of 0.4m (2011: 2.0m) in relation to insurance claims agreed
and awaiting settlement.
Voyager Insurance Company
Limited as provider of insurance
and insurance services.
5 Under a Rebate Assignment dated 15 April 1988, and supplemental agreements dated 15 July 1991 and
29 June 1992, the Company is providing security for the obligations of Andrair Limited, to the head
lessor (an unrelated third party) of an aircraft which is subleased by Andrair Limited to Monarch Airlines
Limited. The annual lease rental was 1.0m. However, a liability will only arise if Andrair Limited defaults
in its lease payment obligations. The quantum of any such liability would be based on the net proceeds
of sale of the aircraft which cannot be determined at the present time.
Andrair Limited as lessee of an aircraft and
beneciary of security agreements.
6 During the year, Monarch Airlines Limited incurred costs of 47,000 (2011: 131,000) in respect of
guarantee fees payable in connection with the acquisition of aircraft.
SMG Asset Management Limited
as guarantor.
7 Sale of seats to the related party by subsidiary undertakings of the Company amounting to 281,000
(2011: 183,000). At 31 October 2012 nil (2011: nil) was due from the related party.
Cosmos Transport Services Limited
as seat broker.
8 The sum of nil (2011: 265,000) was due to the related party at 31 October 2012 in respect
of scheduled airline seats paid for by the related party on behalf of a subsidiary undertaking.
Cosmos Coach Tours Limited.
9 Fee for provision of resort and administrative services and liability insurance 1,079,000
(2011: 1,137,000).
Tourama Limited as provider.
10 The balance due to Tourama Limited at 31 October 2012 was 11,097,227 (2011: 12,784,000). This
covers transaction 10 and payments made by Tourama Limited to unrelated third parties as paying
agent of a subsidiary undertaking.
Tourama Limited as creditor.
11 Fee for provision of management services to a subsidiary undertaking of nil (2011: 50,000). Cosmosguide Holding International NV
as provider.
12 Licence fee for use of the Cosmos name 138,000 (2011: 130,000). The balance due at
31 October 2012 was 138,000 (2011: 130,000).
Cosmos European Travels
Aktiengesellschaft as proprietor.
Notes to the nancial statements continued
Year ended 31 October 2012
65
The Monarch Group
ANNUAL REPORT 2012
26. Related party transactions continued
Transaction Related party
13 Administration fees, contribution to central overheads and supply of UK airport departure point
services charged to the related parties amounted to 1,988,000 (2011: 2,501,000) in the year, and
purchases of scheduled service seats from the related parties of 2,624,000 (2011: 3,371,000).
The balance due from these related parties at 31 October 2012 was 257,000 (2011: 120,000) and
includes holiday booking monies received on behalf of Cosmos Coach Tours Limited.
Cosmos Coach Tours Limited, Archers
Tours Limited, and Cosmos Transport
Services Limited as users and providers
of services.
14 In October 2009, Monarch Airlines Leasing Limited borrowed 15m from Transcontinental Aviation
Limited. Interest on the loan of 1,793,000 (2011: 1,733,000) was incurred during the year ended
31 October 2012.
Transcontinental Aviation Limited
as lender.
15 In December 2009, Monarch Airlines Limited borrowed 25m from Transcontinental Aviation
Limited. Interest on the loan of 1,917,000 (2011: 1,493,000) was incurred during the year ended
31 October 2012.
Transcontinental Aviation Limited
as lender.
16 On 23 March 2011, Transcontinental Aviation Limited provided a 2m guarantee to Morgan Stanley
on behalf of Monarch Airlines Limited to enable Monarch Airlines Limited to hedge fuel.
Transcontinental Aviation Limited
as guarantor.
17 On 25 August 2011, Transcontinental Aviation Limited provided a 10m guarantee to Barclays Bank
PLC on behalf of Monarch Airlines to provide guarantees to suppliers.
Transcontinental Aviation Limited
as guarantor.
18 On 31 October 2011, Amerald Investments NV loaned Monarch 2011 Limited 20m as an advance
on the 40m of renancing provided in November 2011.
Amerald Investments NV as lender.
19 During the year, Transcontinental Aviation Limited provided short-term loans totalling 6,027,000
to Monarch Airlines to cover third party rent payments on aircraft initially covered by the shareholder
lease suspension facility but sold by shareholders and leased back by Monarch Airlines during the year.
By 31 October 2012, these loans and subsequent payments to third parties had been rolled in to the
lease suspension facility disclosed above.
Transcontinental Aviation Limited
as lender.
20 On 11 May 2012, Transcontinental Aviation Limited loaned Monarch Airlines Limited 10m to cover
FX hedging margin requirements. The loan was repaid on 17 July 2012.
Transcontinental Aviation Limited
as guarantor.
21 Mr F Mantegazza, one of the ultimate controlling parties of the Group, was paid 104,000 for services
to the Group in the year. At 30 October 2012 the amount due to Mr F Mantegazza was nil.
Fabio Mantegazza as ultimate
controlling party.
22 On 24 April 2013, Monarch Airlines entered into an agreement with Transcontinental Aviation Limited
to transfer the benet of a US$100m hedge transaction undertaken in early May 2012.
Transcontinental Aviation Limited
as hedging counterparty.
B) Arrangements with other related parties
Transaction Related party
1 Rawlinson Partners Limited invoiced Monarch Airlines 172,000 (2011: 461,000) for its consulting
services during the year. As at the year end there were no outstanding amounts for invoices owed to
Rawlinson Partners Limited.
D I Rawlinson as a Director of
Rawlinson Partners Limited and
Monarch Holdings Limited.
66
The Monarch Group
ANNUAL REPORT 2012
Notes to the nancial statements continued
Year ended 31 October 2012
27. Ultimate parent company and controlling party
The Directors consider that the Companys ultimate and immediate parent company and its controlling party is Amerald Investments NV, a company
incorporated in the Netherlands Antilles, the accounts of which are neither consolidated nor publicly available.
The Directors consider that Mr F Mantegazza, Mr G Mantegazza and Mr M Albek are together the ultimate controlling parties of the Company.
28. Post balance sheet events
On 7 November 2012 the Group completed the sale and leaseback of two Airbus A321 aircraft, the proceeds from which were used to pay down the
outstanding debt. Sale proceeds for the two aircraft totalled 31,677,000.
On 27 February 2013 the Group sold and leasebacked two Airbus A320 aircraft. At 31 October 2012 an impairment review of these assets was carried
out, resulting in write down of net book value of 11,521,000 in the income statement. Sale proceeds for the two aircraft totalled 3,372,000.
67
The Monarch Group
ANNUAL REPORT 2012
Ofcers and professional advisers
Directors
D I Rawlinson
R M Palmer
Non-Executive Directors
R McNulty
A Reid
Secretary
J Marray
Registered ofce
Prospect House
Prospect Way
London Luton Airport
Luton
Bedfordshire
LU2 9NU
Independent auditor
Deloitte LLP
Chartered Accountants
St Albans
68
The Monarch Group
ANNUAL REPORT 2012
Notes
T
h
e

M
o
n
a
r
c
h

G
r
o
u
p

A
n
n
u
a
l

R
e
p
o
r
t

2
0
1
2
The Monarch Group
Prospect House
Prospect Way
London Luton Airport
Luton
Bedfordshire
LU2 9NU
UK
T: 0871 225 0250
F: 0871 225 0252
www.monarchholdingslimited.com