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Even though this is 35 percent down on the previous year, given the torrid time it has had, it is pretty good. The only problem is the metric it chose to report these profits in was EBITDA (earnings before interest, tax, depreciation and amortization).
There are plenty of reasons to be skeptical about the merits of EBITDA.
Charlie Munger, a long-time associate of Warren Buffett and Vice Chairman of Berkshire Hathaway, famously noted: “I think that, every time you saw the word EBITDA [earnings], you should substitute the word ‘bullshit’ earnings.”
Using the terms means essentially adding back interest, taxes, depreciation and amortization to the net profit with the result being an overall much more impressive figure.
In Monarch’s case the total of $60 million (£48 million) is also pre-exceptional items, which in a business that has undergone extensive restructuring can take a heavy toll.
In its last financial year, Monarch reported EBITDA of $91.8 million (£73.6 million) but its pre-tax profit was only $24 million (£19.2 million).
That’s a difference of $67.9 million (£54.4 million).
Perhaps its EBITDA will closely resemble pre-tax profit, perhaps not. We’ll have to wait until sometime next year before we can judge Monarch’s 2015/16 performance.
On the plus side
Despite the questionable use of EBITDA, Monarch looks to be heading in the right direction.
Terrorism and economic uncertainty have hot all parts of the travel industry but Monarch was one of the biggest casualties with uncertainty over its future likely resulted in fewer bookings at the tail-end of the summer season.
CEO Andrew Swaffield managed to persuade majority Greybull Capital to pump in an extra $206 million (£165 million) to keep the company going and next summer’s holiday bookings are up 40 percent year-on-year.
The company is looking forward to welcoming the first of a new fleet of Boeing 737 MAX-8 aircraft at the start of 2018.