The collapse of Monarch Airlines should be subject to an inquiry to establish the role played by the private equity firm that owned the carrier, a former minister has said.
Lord Myners, who served as the Financial Services Secretary to the Treasury under Gordon Brown, has called for an investigation into Greybull Capital's role in the airline's demise.
The private equity firm is owed approximately £150m for loans it made to Monarch since it bought the carrier in 2014.
However, as preferred creditor, it will be among the first to be repaid when the airline's assets are sold off, meaning it could secure some very valuable landing slots at UK airports.
Myners, a Labour peer, said an inquiry was needed to establish whether this was a case of "fraudulent preference". Greybull, however, insisted it had been looking for a buyer for the Luton-based airline in the months before it was forced to enter administration, but to no avail.
"Greybull's involvement with Monarch since 2014 kept the airline flying and its employees in work for three years when no other rescue bid was on the table," a spokesperson for the firm said.
"Greybull provided significant capital to Monarch and did not receive dividends, interest or any repayments of its loans."
Aviation minister Lord Callanan said KPMG, which have been appointed as administrators of the collapsed airline, will have three months to produce a report on the directors' conduct.
"If there is any evidence the directors have acted improperly we will not hesitate to take action against them," he said.
Meanwhile, transport secretary Chris Grayling promised the House of Commons transport committee would hold a "rigorous inquiry" into Monarch's demise, which could stretch as far as recommending measures to ensure a similar situation does not repeat.
Andy McDonald, the shadow transport secretary, said the government, the Civil Aviation Authority (CAA) and Monarch's financial backers had all played a role in the "litany of failures" that ultimately accounted for the carrier.
Britain's fifth-largest airline halted trading with immediate effect last week. On 2 October, the Civil Aviation Authority revealed Monarch had entered administration, after failing to secure a temporary extension to its Air Travel Organiser's Licence (ATOL) for the third time in four years.
Some 750,000 future bookings were cancelled as a result, while around 80,000 of the 110,000 Monarch customers that were stranded overseas have already returned to Britain on flights chartered by the CAA in the largest peacetime repatriation operation in British history.
Approximately 2,000 Monarch employees lost their jobs as the airline entered administration and its directors have been criticised by the British Airline Pilots' Association and Unite union for the way they handled redundancies.