Monarch saved from brink after CAA grants deadline extension to prove it is financially stable

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After the mass cancellation of flights by Ryanair, Monarch’s annual bout of brinksmanship is unlikely to boost confidence among UK airline passengers.

Once again, the Civil Aviation Authority (CAA) has given the budget airline an extended deadline to prove it is financially stable.

In common with 1,300 other holiday firms, Monarch’s Air Travel Organiser’s Licence (ATOL) was due to expire on 30 September. The scheme, designed to protect package holidaymakers when travel companies collapse, is administered by the CAA.

As in 2016, the aviation regulator has given the airline extra time to demonstrate it is a going concern.

The CAA said: “We can confirm that ATOL protection will remain available for eligible holiday bookings made with Monarch on Sunday.”

The cover applies only to package holidays, ie a flight and accommodation booked at the same time. Holidaymakers get a full refund if a travel firm goes bust before their trip starts, and enables them to continue their trip if they are abroad at the time of collapse.

A year ago, Monarch was granted 12 extra days to put additional finance in place, which it did with only hours to spare.

At the time, the Luton-based airline was required to provide ATOL protection to all UK travellers. After £165m in new investment from Greybull Capital was announced, the licence was renewed — and the obligation to protect flight-only passengers was lifted.

The 2017 renewal covers only Monarch passengers who book a package holiday through the company — about 5 per cent of the total. 

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But if the ATOL were to be cancelled, it would signal deep concern about the airline. 

With some travellers reluctant to book, revenue would fall, and suppliers might demand cash — making it difficult for operations to continue. 

Monarch, which has around 2,700 staff, is known to be looking at ”its optimal future shape, size and strategy”; easyJet and Norwegian have been mentioned as possible suitors to acquire some of the flying. 

Concerned passengers are turning to social media for guidance. “Sprice” tweeted: “I hope @Monarch is still bringing me home 5/10. And I’ve just booked more flights with you! When will you release info for customers?”

The airline responded: “Our flights are operating as normal, carrying Monarch customers as scheduled.”

The Independent estimates that up to 20,000 Monarch passengers are currently abroad, with hundreds of thousands holding future bookings.

A year ago an extremely elaborate “shadow airline” was set up by the CAA in case Monarch collapsed, with planes flown to Mediterranean holiday airports from across Europe and even the US. 

The cost of over £25m was borne by the Air Travel Trust, which is funded by a levy of £2.50 on every ATOL holiday.

There are unsubstantiated reports that Qatar Airways planes have been sent to Stansted as a precaution.

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