Monarch Airlines in talks about cash injection amid financial health rumours

• Report rights infringement
• published: 27 Sep 2016
• views: 18

Monarch Airlines in talks about cash injection amid financial health rumours. Monarch Airlines is in discussions about a multimillion-pound injection of cash as it attempts to quash rumours about its financial health. Britain’s oldest surviving airline brand had to issue a statement about its financial position after concerns were raised on social media over the weekend about its ability to keep flights in the air. The Luton-based company, which began operations in 1968, was on the brink of collapse two years ago when it was bought by private equity group Greybull. In its statement it said it expected to make profits for this financial year and added: “Our flights and holidays are operating as normal, carrying Monarch customers as scheduled.” Monarch, among many other airlines, must renew its Air Travel Organiser’s Licence (Atol) by 1 October. An Atol – which requires an operator to show it has the financial resources to operate for three months – provides compensation to customers when travel companies go bust. Speculation about the airline’s financial position appears to have begun when plane enthusiasts spotted that alternative aircraft were being lined up to cover incoming flights at the same time that Monarch flights were due to depart. It was suggested that these flights, reportedly from United Airlines, had been chartered by the Civil Aviation Authority to bring back stranded passengers. The CAA runs the Atol scheme, which is funded by a £2.50 levy on each passenger booking . The CAA said: “As a responsible regulator that puts consumers first, we have robust contingency plans for a wide range of potential issues. These flexible contingency plans enable us to be prepared to act in the interests of consumers on a variety of issues, whenever it is necessary.” Monarch made no reference to its licence talks in its statement. It said it was expecting to make £40m – before taxes and other costs – by the end of its financial year in October. “This is despite a difficult period for the holiday industry due to terrorist incidents, Brexit and the resulting devaluation of sterling,” Monarch said. The airline added: “Over the weekend, there has been negative speculation about Monarch’s financial health ... To weather tougher market conditions and to fund its ongoing growth, Monarch expects to announce a significant investment from its stakeholders in the coming days.” The CAA said it did not comment on “specific operational, financial or licensing matters relating to any of the businesses we regulate”. It was not clear how big any investment would be and there are suggestions that the Chinese HNA Group, a conglomerate that owns Hainan Airlines, is among those interested. In June, Chen Feng, the founder of Hainan, appeared to confirm his interest in Monarch. Monarch has previously said it hopes to bring 30 Boeing 737-Max models – more fuel efficient and trustworthy – into service from November 2018. The business employs around 2,800 staff who took pay cuts of up to 30% and accepted hundreds of redundancies , when the rescue deal with Greybull was agreed. The Pension Protection Fund owns the other 10% of the airline. As well its home base of Luton, Monarch also flies from Birmingham, Leeds Bradford, London Gatwick and Manchester to 30 destinations such as Alicante, Madeira and Gran Canaria. It offers package holidays which are also Atol-protected. The CAA said: “All UK companies selling holidays involving flights must hold an Atol licence from the CAA, which is renewed annually. The CAA assesses each application to obtain or renew a licence to ensure the company is financially fit for the duration of the licence period and each application is assessed on its own merit. “Our policy criteria for assessing applications can address a wide range of individual circumstances and will take into account the potential impact on consumers of an applicant stopping trading.”