Emergency talks to save crisis-hit Monarch
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.