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£165m cash injection allows Monarch to retain operating licence

Published 12/10/2016

Monarch's operating licence is due to expire at midnight
Monarch's operating licence is due to expire at midnight

Monarch has secured a £165 million cash injection from its owner, Greybull Capital, allowing it to retain its licence to operate.

The airline had faced a midnight deadline to obtain fresh funding or risk being unable to renew its Atol licence.

On Wednesday, the group said that, alongside the investment - the biggest in its 48-year history - Monarch would take delivery of the first of 30 Boeing 737 MAX-8 aircraft in 2018.

Chief executive Andrew Swaffield said the investment means the firm is in "great shape" and that he is "up for the fight".

In an appearance at the annual convention of travel organisation Abta in Abu Dhabi, Mr Swaffield said: "I'm under no illusions. It's a very competitive market out there.

"Running an airline is not for the faint hearted and running one in Europe, competing with some of the biggest low-cost carriers in the world, is not easy.

"But we are up for the fight and I think that we have proven since 2014, and again recently, that we don't lie down easily.

"I would say you can bet on our future."

However, he added that the company is preparing for a "challenging market" as the slump in sterling and a rise in terrorism dogs the industry, with profit set to be dented as a result.

Monarch's future had been cast into doubt over the past weeks, with the firm forced to deny speculation that it was in financial trouble.

But the extension of the Atol licence by the Civil Aviation Authority, which was dependent on fresh funding, means Monarch will now be able to sell package holidays.

The scheme compensates travellers in full and ensures they are not stranded if a holiday company collapses.

Mr Swaffield added that holiday bookings suffered a "double digit decline" amid speculation that the company was in financial difficulty.

Greybull acquired a controlling stake in Monarch in 2014, but the group has struggled financially.

The firm booked a £19.2 million pre-tax profit in the 12 months to the end of October 2015 following a £57.3 million loss a year earlier, according to accounts filed at Companies House.

A CAA spokesman said: "The CAA has renewed Monarch's Atol licences until the end of September 2017 following confirmation that all licence requirements have been met.

"Monarch's licences permit them to sell Atol-protected holidays until 30 September 2017, after which they will be required to obtain a new licence in line with the annual process for all Atol-protected companies."

Abta also welcomed the announcement that Monarch had retained its licence to operate.

A spokeswoman for the organisation said: "Monarch is one of the UK's best-known, most established travel brands and has been operating successfully for the past 48 years.

"It is very good news not only for Monarch, its staff and customers - but for the travel industry as a whole."

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