The UK’s High Court has blocked Monarch Airlines from selling its runway slots, making it harder for the failed carrier to pay off outstanding debt.

Lord Justice Gross and Justice Lewis ruled on Wednesday that KPMG, Monarch’s administrators, did not have any rights to the airport slots.

The judgment, which KPMG said it will appeal “as a matter of urgency”, is also a blow for Monarch’s owners, the private equity group Greybull Capital given that the airline’s slots are its most valuable assets, worth as much as £60m.

Greybull, which bought a majority stake in Monarch three years ago, will have the first call on the failed carrier’s assets even though it will not be able to profit from the proceeds of a slot sale.

The ruling raises questions about whether the company will be able to pay back the taxpayer.

After Monarch entered administration in early October, Marc Meyohas, a partner at Greybull wrote a letter to the Commons’ transport select committee acknowledging that his firm had a “moral obligation [if we make a profit] . . . to defray the costs incurred by the Department for Transport (DfT) in repatriating Monarch customers”.

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Britain’s biggest peacetime repatriation cost UK taxpayers £60m, when the Civil Aviation Authority (CAA), an arm of the DfT, brought 110,000 tourists back to the UK by leasing aircraft from 16 carriers.

A Greybull spokesman told Verdict:

The legal case deals with novel and complex issues. In practice this is a matter for KPMG acting as administrators to manage. Greybull can do little more than await the outcome of the administration process.

Historical precedence?

Meanwhile, the two judges in the London court rejected Monarch’s claim that the independent industry body Airport Coordination Limited (ACL) had a duty to allocate slots to Monarch for next summer “by reason of historical precedence”.

“Accordingly, the consequence of our decision is that the summer 2018 slots are to be placed in the slot pool,” they said.

At the end of October, the ACL, which allocates slots twice yearly, decided not to grant Monarch certain take-off and landing slots.

John Steel QC, an aviation lawyer said:

Slots can only be held by an airline with a valid operating license. If an airline ceases to hold a valid operating license, its slots revert to the slot pool.

High price slots

Wizz Air, easyJet and British Airways‘ owner IAG are among those interested in acquiring Monarch’s runway slots.

Runway slots can be highly lucrative.

In February 2016, Oman Air paid Air France-KLM a record $75m for a pair of take-off and landing slots at London Heathrow.

The price was $15m more that the previous record, which was set last year when American Airlines paid Scandinavian carrier SAS $60m for its slot at London Heathrow.

In 2013, easyJet paid Flybe £20m for 25 slot pairs at Gatwick, the airport where Monarch operated about 20 slot pairs a day.

Monarch, the UK’s fifth-biggest airline blamed terror attacks in Tunisia and Egypt, increased competition, and the fall in the value of the pound since the Brexit vote for its demise.

The airline became the third carrier in Europe to enter administration this year, joining Air Berlin and Alitalia.