Monarch Airlines’ future will go down to the wire, as the carrier looks to seal a £165m funding package designed to secure its licence to operate.
The airline will lose its Air Travel Organiser’s Licence (Atol) – which allows it to fly package holiday passengers – at midnight on Wednesday if it does not secure a deal.
The UK airline industry regulator, the Civil Aviation Authority, has already granted Monarch a 12-day extension from the original deadline of 30 September to show it had the money to stay afloat.
Losing the licence would make it far harder for Monarch to recover its finances because it would lose passengers on Atol-protected package deals, though it could still carry passengers who had booked a flight only.
But an agreement between Monarch, its majority owner, the private equity firm Greybull Capital, the aircraft manufacturer Boeing and the airline’s banks is expected to be tied up on Wednesday.
The package is expected to involve a revision of the terms of Monarch’s 2014 order for 45 new planes from Boeing.
Under the agreement, which has yet to be finalised, Boeing would convert the order into lease deals, meaning Monarch could still use the planes but would have more cash to prove to the CAA that it can fund itself.
It is not clear whether all 45 plane orders would be converted into leases.
Greybull would also inject fresh money as part of a package worth a combined £165m, which it has said would be the largest investment in the company’s 48-year history if it goes ahead.
The rescue deal is designed to help Monarch survive difficult trading conditions due to ongoing international security concerns and the weakness of sterling.
Monarch has suffered particularly badly from a downturn in package holidays to Turkey and Egypt, amid terrorism fears, while air traffic control strikes in France have exacerbated its woes.
