It has been recently reported on the Daily Telegraph that European airline Monarch was now returning to
profitability after a company-wide restructuring.
The company, which had been struggling and nearly had to close down due to losses mounting up to £110.6m in 2014, “put in place a restructuring of the business which saw 700 jobs lost and pay-cuts of 30pc for pilots. (…)
These staff changes contributed to £55m of cost-savings while additional measures to renegotiate aircraft leases and scrap long-haul and charter flights saved the business a further £200m.”
Monarch is not yet out of the woods but after all the cuts and the investment by the firm Greybull Capital, it managed to reduce losses by £40m. What next? When you are restructuring, “cutting out the fat” is all well and good but only works to a certain extent. As a company that provides services, you cannot cut down on staff too much, that it will affect the quality and in the case of an airline, the safety of your customers.
It will be interesting to see what Monarch will do next, but we would suggest that along with all the cost saving efforts, they consider an innovation programme that also includes crowdsourcing ideas from customers, colleagues and other stakeholders. As a company facing hard times and with imminent job loss on employee’s minds, it would be not only a great way of getting new ideas on how to improve services and increase cost savings, but also a way of engaging employees in a meaningful and useful way.
We have been recently working with Southeastern, another company in the transport industry, with very good results in employee engagement through an idea management platform. Southeastern recognised that it needed to invest in a formal idea and innovation management platform that would enable a two-way dialogue between decision-makers and employees. Maybe it’s something like this that Monarch needs moving forward?