Monarch Airlines, a British flight operator backed by Greybull Capital, has entered administration.
The collapse has left around 110,000 passengers stranded overseas, with Monarch scrambling to arrange flights to bring them home. Monarch is the largest UK airline to enter administration; Greybull acquired the business in 2014 for around £125 million, before injecting a further £165 million into Monarch last year.
In December, a strong performance helped Carlson Capital's Double Black Diamond fund achieve a double-digit return in 2021. Q4 2021 hedge fund letters, conferences and more Double-Digit Return According to a copy of the latest investor update, which ValueWalk has been able to review, Clint Carlson's Double Black Diamond fund returned 2.9% in December and Read More
The news is the latest development in a turbulent year for the airline industry. Most recently, budget carrier Ryanair said a pilot shortage that led to the cancellation of up to 50 flights a day could cost the company up to €25 million. In August, Germany’s Air Berlin filed for bankruptcy after a proposed investment from shareholder Etihad fell through. The bereft carrier is now being sold at auction by the government. Italy’s Alitalia faces a similar fate.
As the turmoil continues, private capital’s love affair with the skies looks set to fall. Globally, PE investments in the air industry are on track for their lowest number since 2010, according to the PitchBook Platform. By contrast, M&A activity has remained relatively steady compared with last year.
PE and M&A deals in the air industry
The divergence might seem to suggest that healthy airlines are looking to pick up the scraps of failed investments, yet a glance at the deals so far this year paints a more complex picture.
While it is true that some deals are borne of necessity, such as Flyeasy India’s reported acquisition of failed airline Air Pegasus, as well as impending deals for Alitalia and Air Berlin. Yet innovation in the sector is also driving growth, as with Geely’s purported takeover of flying car startup Terrafugia in July. And if private capital is ultimately taking a leave of absence from the air industry, corporate acquirers may be eager to pick up the cheap scraps alongside the new technologies.
Who is innovating in the air industry? Check out our profiles of three companies making flying cars.
Article by Sean Lightbown, PitchBook