Emer­gency talks to save cri­sis-hit Monarch

The Sunday Telegraph - Money & Business - - Front page - By Anna Isaac

MONARCH, the UK’S fifth largest air­line, was last night granted a one-day ex­ten­sion to its li­cence af­ter emer­gency talks with reg­u­la­tors.

This tem­po­rary ar­range­ment comes amid con­cerns that the air­line’s losses were spi­ralling out of con­trol. If left with­out its CAA granted li­cence the com­pany could have to call in ad­min­is­tra­tors for its pack­age hol­i­day busi­ness. This could leave thou­sands of cus­tomers un­cer­tain about their home­ward travel across the EU and Turkey.

Monarch’s ATOL li­cence was orig­i­nally due to ex­pire yes­ter­day, and its bosses are now try­ing to con­vince the Civil Avi­a­tion Au­thor­ity (CAA) to grant it a longer term re­newal.

With the air­line’s fu­ture in doubt, the CAA has said it will pro­vide a “daily up­date” on the sta­tus of its abil­ity to op­er­ate its pack­age hol­i­day arm.

A source close to the air­line also told

The Sun­day Tele­graph the CAA had raised con­cerns over the com­pany’s sub­stan­tial re­cent losses. These po­ten­tially fa­tal con­di­tions for the com­pany have come amid “blood­bath” trad­ing for short-haul air­lines, the source said, as ter­ror­ism at­tacks and se­cu­rity con­cerns in tra­di­tion­ally strong sales ar­eas such as Tu­nisia and Turkey have hit con­sumer de­mand.

“Our flights are op­er­at­ing as nor­mal, car­ry­ing Monarch cus­tomers as sched­uled. Our ATOL li­cence – for pack­aged hol­i­days – is with the reg­u­la­tor. Flight only book­ings do not re­quire an ATOL li­cence, in line with other air­lines,” a Monarch spokesman said.

The com­pany’s tour-op­er­at­ing arm which re­quires an Atol­li­cence rep­re­sents just 5pc of the group’s rev­enues. Ahead of its li­cence re­newal last Septem­ber, the air­line had to seek a cash in­jec­tion of £165m from in­vestor Grey­bull Cap­i­tal, its fourth in as many years. This helped Monarch ac­quire a 12-day ex­ten­sion be­fore its ATOL li­cence was re­newed. Ac­counts filed by the com­pany in Au­gust for the year to Oct 2016, showed a loss of £219m, down from a profit of £26.9m in 2015. The com­pany said “a num­ber of trad­ing head­winds” had caused dif­fi­cul­ties, no­tably the clo­sure of Sharm El-sheikh air­port.

Sources told Sky News that the CAA had been mak­ing con­tin­gency plans to pre­pare for a re­jec­tion of Monarch’s li­cence due to fi­nan­cial con­cerns.

In ad­di­tion to the 1,000 pas­sen­gers who could be im­me­di­ately af­fected, 500,000 cus­tomers have book­ings in the com­ing months. The air­line, which serves over 40 des­ti­na­tions, also em­ploys nearly 2,500 staff.

Re­ports last week claimed that the com­pany was work­ing with KPMG to find fu­ture op­tions for its short-haul busi­ness by se­cur­ing a joint ven­ture with a sec­ond air­line. Sugges­tions were made that Wizz Air was in­ter­ested in a part­ner­ship. easy­jet and Nor­we­gian Air Shut­tle are also tipped as hav­ing made bids for parts of the busi­ness.

Monarch said it is “hav­ing reg­u­lar dis­cus­sions on a num­ber of op­tions with po­ten­tial strate­gic part­ners”.

Con­sid­er­ing the sta­tus of the com­pany’s fi­nances it is un­clear if a tem­po­rary li­cence re­newal from the CAA will pre­vent it from go­ing into ad­min­is­tra­tion, rais­ing sig­nif­i­cant ques­tions for the more than six mil­lion pas­sen­gers ex­pected to fly this year from air­ports in­clud­ing the com­pany’s base in Lu­ton, Lon­don Gatwick, Birm­ing­ham, Leeds, and Manch­ester.

“The CAA will pro­vide a daily up­date with re­gard to the pro­tec­tion that is avail­able to Monarch’s cus­tomers,” a CAA spokesman said.

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