Monday looks set to be a critical day for the future Monarch Airlines after the CAA granted it a temporary extension to its Atol licence that should have been renewed today.
It is the second year in succession that the carrier has had to be given an emergency extension for the renewal of its Atol which allows it to sell package holidays.
The fact that Monarch is once again at loggerheads with the CAA prompted speculation that it could fail as soon as Monday should talks with the regulator fail to conclude positively.
It also indicates that the UK regulator has significant concerns about Monarch and its owner Greybull Capital despite last year’s £165 million restructure said to have secured its future.
This secured a dramatic 11th hour Atol renewal after a 12-day extension and saw chief executive Andrew Swaffield immediately jet out to the Abta Travel Convention in Abu Dhabi to deliver the news.
In July Travel Weekly revealed that the CAA spent £25.6 million leasing aircraft for a shadow flying programme last September should it be needed if Monarch failed.
The carrier had previously sought to calm fears about this year’s Atol renewal saying speculation that it was looking to sell parts of its business and switch to long-haul was unrelated.
This year Monarch’s Atol is for just 5% of its revenue because seat-only sales were taken out of its licence after last year’s restructure. However, failure to renew its licence would be a fatal blow for the airline.
A statement on the CAA’s website says: “The Atol renewal process is on-going and the CAA will conclude the processing of applications from approximately 1,300 Atol holders in the next 24 hours.
“In certain circumstances this could require a temporary extension to complete this process.
“In line with our usual practice, we will not comment on the specifics of any Atol holder’s application until such time as the process has reached a resolution.
“However, we can confirm that Atol protection will remain available for eligible holiday bookings made with Monarch on Sunday.
“The CAA will provide a daily update with regard to the protection that is available to Monarch’s customers.”
Monarch said in a statement: “Our Atol licence – covering packaged holidays – has been temporarily extended while we conclude discussions.
“Our flights are operating as normal, carrying Monarch customers as scheduled.”
Monarch is thought to have seen reduced income this year due to fierce competition in the short-haul European flights market.
However, insiders say the airline will be given a boost when deliveries of next generation short-haul Boeing 737 aircraft begin in 2018 that will put it on a firmer financial footing.
Swaffield has been lined up to deliver the Airlines UK Annual Lecture on Wednesday.
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