THE MONARCH GROUP TRADING UPDATE 12 JUNE 2013 REVENUE AND PASSENGER NUMBERS RISE AS MODERNISATION OF THE GROUP DELIVERS RESULTS

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1 THE MONARCH GROUP TRADING UPDATE 12 JUNE 2013 REVENUE AND PASSENGER NUMBERS RISE AS MODERNISATION OF THE GROUP DELIVERS RESULTS The Monarch Group, the UK s leading independent travel group, is today publishing an Annual Report and Accounts for the 12 months ending 31 October 2012, and is providing an update on business and operational highlights for the first six months of its current financial year to October Iain Rawlinson, Executive Chairman of The Monarch Group, said: The Group has made a satisfactory start to the financial year in the six months to 30 April Monarch Airlines has achieved good growth in passengers, yields and revenues, Tour Operations has exceeded its targets while Engineering has also had a solid start to the year. There is a growing customer awareness and appreciation of our core proposition across our divisions of superior experience at a competitive price. Together with the 8.9% increase in Group revenues confirmed today for the 2012 financial year, and the success of the on-going cost-reduction improvements, this performance underlines the substantial progress we are making towards returning the Group to overall profitability in the current financial year to October Divisional highlights for the six months ending 30 April 2013 Monarch Airlines H Increase in total revenues year on year by 10 per cent from million to million Increase in total yields by 4 per cent Increase in total passengers year-on-year by 7 per cent from 1.8 million to 1.9 million Further progress in the development of scheduled customer proposition, including a 42 per cent increase in ancillary seat revenue and a further strengthening of market share across key routes Significantly strengthened management team, with the appointments of three new senior directors in the areas of Revenue Management and Network Development, Customer Experience and Commercial Partnerships. Tour Operations (Cosmos Holidays, Avro and somewhere2stay) H Increase in revenues year-on-year by 15 per cent from 65.9 million to 75.5 million Increase in total passenger volumes year-on-year by 14.6 per cent from 164,000 to 188,000 1

2 Successful start to implementation of new TravelBox holiday bookings system to enhance online product offering and customer experience. Monarch Aircraft Engineering H Increase in total revenues year-on-year by 16.7 per cent from 40.3 million to 47.0 million Award of key contract by Flybe to provide maintenance services across new aircraft types at four UK airport bases, and voted Maintenance and Repair Organisation (MRO) of the Year 2013 New 110,000 square feet hangar facility at Birmingham Airport, to drive own Group and further third-party MRO business, on track to be operational on 1 November 2013 as planned. Retail and Online H Increase in unique visitors to the Group s customer online platforms year-on-year by 13.6 per cent from 8.7 million to 9.8 million. Highlights for the financial year ending 31 October 2012 Substantial reduction in loss before tax on an adjusted basis by 71 per cent from 51.1 million to 14.9 million, in line with business plan objectives Major progress towards achievement of the Group s turnaround plan, which is targeting a return to overall Group profitability by October per cent increase in total Group revenues (net of intra-group sales) from million to million Achievement of 31.6 million operational like-for-like cost savings, as planned In each of the Group s trading divisions in FY12: o Monarch Airlines increased passenger volumes from 5.9 million to 6.3 million and total revenue per seat by 7.2 per cent, together with a 47 per cent reduction in pre-tax losses; o Tour Operations increased total revenues by 3.2 per cent, achieved total passenger volumes of approximately 815,000 and pre-tax profitability was maintained at 5.6 million; and o Monarch Aircraft Engineering increased total turnover by 8.9 per cent to 86.3 million, with third-party revenues accounting for 29 per cent, and pre-tax profit increased by 83 per cent to 5.3 million. Significant advances in e-commerce capabilities with an increase in unique visitors to the Group s websites by 21 per cent over the previous year to 20 million Strengthened governance with the appointment of Sir Roy McNulty and Austin Reid as Non- Executive directors to the holding company Board. 2

3 Commentary and outlook Since completion of the 2011 Refinancing announced on 3 November 2011, implemented in response to the weak airline market conditions and high fuel costs experienced in that year, The Monarch Group has been focused on its turnaround strategy which is aimed at unlocking the potential value of its well-known travel brands, and achievement of profitable operations in all divisions by the end of the year to October Commenting on the final results for FY12, the further progress in the first six months of FY13 and the outlook for the balance of the financial year, Iain Rawlinson, Executive Chairman of The Monarch Group, said: The final FY12 numbers, including a 71 per cent reduction in adjusted pre-tax losses, underline the substantial progress we have made in the first full year of our turnaround towards our target of restoring the Group to overall profitability by October The Group has made a satisfactory start in the first six months of the current financial year to October 2013, with further increases in Monarch Airlines passengers, yields and revenues. Cosmos Holidays and our related tour operating activities have continued to strongly outperform the overall holiday market, and our engineering activity continues to increase revenues from a growing thirdparty customer base. As at the beginning of June 2013, bookings for the key departure months of July and August are advancing well with both the Airline and Tour Operations Divisions ahead of last year in load factors and yields for the summer season. We have appropriate levels of capacity and high-quality inventory at competitive prices available, and we are satisfactorily positioned to meet the requirements of our customers during the peak summer trading period. The Group has recently announced the appointment of three highly experienced directors to the Board of Monarch Airlines, who will further strengthen that division s resources in three key areas of revenue management and network development, customer experience, and commercial partnerships, and we expect they will add significantly to the ongoing development of this business. "On 23 May the Group launched The Monarch Foundation to reinforce the Group s corporate citizenship and enhance the effectiveness and awareness of its long-standing charitable activities. The satisfactory trading environment experienced in the first half has continued into the summer months. However, second half market conditions remain challenging as the Group remains cautious about the economic outlook in the UK and the pressures on consumers from cost inflation and employment prospects. Our expectations for the market for the remaining part of this year and next are accordingly conservative. Luton 12 June

4 THE MONARCH GROUP Business and operational update for the six months ending 30 April 2013 Monarch Airlines Overview Monarch Airlines is a leading scheduled leisure airline, flying principally to destinations around the Mediterranean, the Canary Islands and winter ski destinations, which provides a clear and real choice to consumers on its network who value superior customer experience at a directly equivalent price. In FY12 Monarch Airlines total capacity was 7.6 million sector seats, and the Airline operated from six bases London Gatwick, Manchester, Birmingham, East Midlands, London Luton and Leeds-Bradford airports. Consumers are now recognising the quality of the Monarch Airlines offer, differentiated from its competitors through the delivery of its high-quality low-fare proposition focusing on choice and superior customer care. Alongside this Monarch Airlines has expanded its network to include new winter ski destinations of Munich, Friedrichshafen, Innsbruck, Salzburg and Geneva. In winter flying, on 83 per cent of its capacity Monarch Airlines occupied the number one or number two market positions. In November 2012, Monarch Airlines announced plans for the re-equipping of its airline 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 Airline s customers, better asset utilisation and efficiency, and enabling Monarch Airlines to benchmark its operations directly against its peer group. The world s largest aircraft manufacturers are submitting proposals to the Airline which will pursue a financing strategy incorporating both leasing and purchasing of aircraft. A decision is expected before the end of this financial year. Update for H During H Monarch Airlines total passenger volumes increased year-on-year by 6.9 per cent from 1.8 million to 1.9 million passengers and total Airline revenue increased year-on-year by 10.1 per cent from 187.4million to million. A strong focus on providing customers with an innovative and attractive range of ancillary products to enhance the travelling experience and overall customer proposition continues to support yield growth and overall revenue-generation. Reflecting strong revenue management and the aggregation of ancillary products into a customer-focused offer branded as Airpacks, ancillary seat revenue from scheduled airline activities increased year-on-year by 42 per cent from 24.3 million to 34.5 million, and total revenue per seat increased year-on-year by 9.0 per cent from to

5 During H customer awareness of the Airline s well-established scheduled network has continued to grow, with the nationwide launch during the winter booking period of a new brand advertising campaign, the expansion of routes from 35 in H to 112 in H and the launch of a new base at Leeds-Bradford Airport for summer 2013, which has strengthened the Airline s presence in the North of England. Increasing cut-through of the Monarch brand among consumers is reflected by continued growth in the number of unique visitors to the Monarch.co.uk website, which increased year-on-year by 18.6 per cent from 4.8 million to 5.7 million, and online booking revenue increased year-on-year by 14.3 per cent from million to million. Market share on key routes also strengthened during H From Midlands airports (East Midlands and Birmingham Airports), Monarch is the leading airline to and from its scheduled destinations with a 25 per cent market share, compared to 16.9 per cent for the same period in From and to London Gatwick Airport, Monarch s share of its scheduled destinations increased year-on-year from 11.9 per cent to 14.6 per cent and, from and to Manchester Airport, where Monarch is the leading airline on its scheduled destinations, market share increased yearon-year from 28.3 per cent to 30.1 per cent. Monarch s overall share of total UK traffic to its scheduled destinations increased year-on-year from 10.0 per cent to 11.7 per cent. As part of an expansion programme which will see a growth in the Airline s fleet from 32 aircraft in 2012 to 39 during 2013, delivery was taken in March and April 2013 of two new-technology, fuelefficient Airbus A320 aircraft, both of which have been stationed at Leeds Bradford airport to support the summer 2013 programme. To enhance customers online and mobile experience, a new smartphone App was launched in April 2013 containing a variety of useful features, including the ability to find, book and check the status of flights, find directions and traffic reports for journeys to airports, as well as a function for locating a parked car on return to the airport of departure. A new organisational structure has been implemented to optimise the management of the Airline and accelerate the development of the business. This organisational change includes new Director-level appointments, as follows: Revenue Management and Network Development Marisa Blasco Director of Customer Experience and Marketing Tim Williamson Commercial Partnerships and Business Development Adrian Tighe Summary CVs for these new appointments are set out in Appendix 2 below. These directors are welcomed to the Group. With a high-quality customer offer of superior service at a competitive price, increased airline capacity and higher levels of consumer awareness, Monarch Airlines is satisfactorily positioned for 5

6 its first full summer of flying to 112 leisure destinations, and current monthly load factors are broadly in line with expectations for the season. A table of key operational and revenue statistics, relating to Monarch Airlines for H and FY 2012, is provided in Appendix 1 below. Tour Operations Cosmos Holidays, Avro and somewhere2stay Overview The Tour Operations division of The Monarch Group comprises Cosmos Holidays and also includes Avro and somewhere2stay. 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 confidence. Avro provides a broad range of flight-only seat availability, duration and prices to meet demand from tour operators, including Cosmos, and the growing dynamic packaging sector, selling overall in excess of one million flight sector seats annually. Finally, somewhere2stay offers low-cost hotel, villa and apartment accommodation worldwide. Update for H Total passenger volumes for H increased by 14.6 per cent year-on-year from 164,000 to 188,000. This included a strong performance in package holidays for winter 2012/13, where Cosmos Holidays increased sales volumes on winter 2010/11 by 5.0 per cent, compared to a decline of 5.0 per cent over the same period for the overall market. Growth in revenue performance in each of the key product sectors package holidays, flight-only and accommodation-only achieved an increase in total revenues year-on-year by 15 per cent from 65.9 million to 75.5 million. During the period, the Tour Operations division successfully commenced implementation of the new Codegen TravelBox inventory management software to transform the breadth of holiday product across all brands, to meet the changing needs of the business, customers and suppliers and to significantly increase the speed to market of the business. During H unique visitors to the division s package holiday websites increased by 17.7 per cent year-on-year from 2.7 million to 3.2 million, and online booking revenue increased year-on-year by 34.5 per cent from 25.1 million to 33.7 million. With a highly-sold programme for summer 2013, Cosmos Holidays high-quality package offer to over 70 holiday destinations worldwide continues to strongly outperform the total market, and margins and selling prices are ahead of the same period a year ago. 6

7 Monarch Aircraft Engineering (MAEL) Overview MAEL provides important aircraft maintenance services from its principal bases at London Gatwick, London Luton and Manchester airports to the Monarch Airlines fleet, and continues to attract new blue-chip third-party customers globally. Third-party engineering customers include, amongst others, easyjet, Alitalia, Thomson Airways, Wizz, Cyprus Airways, DHL, Air Arabia, Emirates and LOT Polish Airlines. Update for H Total revenues increased year-on-year by 16.7 per cent from 40.3 million to 47.0 million, of which 31 per cent was derived from third-party customers. On 30 April 2013 MAEL announced an important new commercial agreement with Flybe for the provision of Bombardier and Embraer line maintenance in the UK at Birmingham, Manchester, London Gatwick and East Midlands airports, adding to its already extensive capabilities in Airbus and Boeing-type aircraft. MAEL will also deliver year-round maintenance support to Flybe from its new 110,000 square feet hangar located at Birmingham Airport, which is on track to become operational as planned on 1 November 2013, and will employ a large number of highly-skilled and qualified engineers. The new facility at Birmingham will enable MAEL to service a larger share of the growing UK market for aircraft maintenance services (including international long-haul carriers) and to contribute to the achievement of the division s strategic objective to increase the proportion of revenues derived from third-party customers to approximately 50 per cent by MAEL received a strong endorsement of the progress and reputation it continues to forge as a global leader in aircraft maintenance services when, in January 2013, it was voted by aviation industry customers MRO of the Year 2013 at the Aviation 100 Awards. MAEL s forward schedule for maintenance and repair services remains strong, driven by the continuing growth of third-party business, and this division of the Group is well-positioned for what is expected to be a strong summer trading period. Retail and Online Overview The Retail and Online activity supports the Group s 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 across the travel market. Update for H The Group continues to make significant advances in its e-commerce capabilities. Unique visitors to the Group s customer online platforms increased year-on-year by 13.6 per cent from 8.7 million to 9.8 million, and overall booking revenue increased year-on-year by 16.4 per cent from million to million 7

8 The Monarch Group corporate governance and transparency The Group is today publishing its first Annual Report and Accounts and in February 2013 launched a new corporate website, both of which underline a commitment to enhancing stakeholders understanding of the capabilities and prospects of the Group and the strong industrial logic which underpins the Group s unique combination of businesses. On 23 May 2013 the Group launched The Monarch Foundation, a new entity within the Group to organise all of the charitable activity that is carried on by the Group and in the Group s name. Through more effective coordination of these activities, the Group aims to build up its effectiveness as a good corporate citizen in the locations where it operates and, at the same time, to positively reinforce its brand values to its millions of customers. A copy of The Monarch Group s FY12 Annual Report and Accounts will be available from the Group s corporate website at ENDS CONTACTS Tulchan Communications David Shriver / Jonathan Sibun Tel:

9 APPENDIX 1 MONARCH AIRLINES KEY OPERATIONAL AND REVENUE STATISTICS H Monarch Airlines Key Operational and Revenue Statistics 6 months ending April 13 6 months ending April 12 Change % Operational measures Total passengers ('000) 1,952 1, Total seats ('000) 2,471 2, Load Factor (%) Average Number of Aircraft Revenue measures Total Revenue Per ASK (p) Core Seat Revenue Per ASK (p) Ancillary Seat Revenue Per ASK (p) Ancillary Non Seat Revenue Per ASK (p) MONARCH AIRLINES KEY OPERATIONAL AND REVENUE STATISTICS FY 2012 Monarch Airlines Key Operational and Revenue Statistics 12 months ending 31 October months ending 31 October 2011 Change % Operational measures Total passengers ('000) 6,277 5, Total seats ('000) 7,382 7, Load Factor (%) Average Number of Aircraft Revenue measures Total Revenue Per ASK (p) Core Seat Revenue Per ASK (p) Ancillary Seat Revenue Per ASK (p) Ancillary Non Seat Revenue Per ASK (p)

10 APPENDIX 2 MONARCH AIRLINES NEW DIRECTOR APPOINTMENTS SUMMARY BIOGRAPHIES Marisa Blasco - Director of Revenue and Network Development Marisa Blasco is currently Pricing and Yield Management Director for Hertz, EMEA. Marisa began her career at Iberia and worked in a variety of commercial and strategic roles and became the Airline s Vice President Revenue Management, where she played a key role in the revenue management strategies for clickair, the low-cost carrier which later merged with Vueling. Marisa then joined Brussels Airlines (part of Lufthansa Group) as Vice President Revenue Management and Pricing, where a key achievement was to lead the integration of processes and systems for Brussels traditional and low-cost carrier activities. Tim Williamson - Director of Customer Experience and Marketing Until recently, Tim Williamson was Chief Executive of Travel Department, the privately-held tour operator offering over 1,000 holiday itineraries in 40 countries. Prior to joining Travel Department, Tim was Product Director at First Choice Holidays. With the merger of TUI and First Choice in 2007, Tim was appointed to the role of Customer Director at TUI. Adrian Tighe - Director of Commercial Partnerships and Business Development Adrian Tighe is currently Managing Director of Transport and Borders, a business within G4S Group which provides outsourcing services to clients including British Airways and Virgin Atlantic. Adrian has been responsible for renegotiating G4S s substantial supplier contract with BA. Previously, he spent 18 years at BA, where his final role was to lead the Airline s focus on reducing costs and improving processes to maximise the benefit of spend with key strategic suppliers. He was co-chair of BA s joint ventures with Qantas and Iberia. 10