Stricken airline Monarch was handed a 24-hour reprieve last night as it teetered on the brink of financial collapse.
Britain’s fifth biggest airline is locked in talks over a last-minute rescue amid fears that 100,000 customers could be left stranded.
Government sources said preparations have already begun for a ‘mass repatriation’ of passengers should the worst happen. The Foreign Office has alerted consulates in Monarch’s destination cities to call in extra staff.
Stricken airline Monarch was handed a 24-hour reprieve last night as it teetered on the brink of financial collapse
Sources said extra planes had been lined up to rescue stranded holidaymakers. Two fully staffed Qatar Airways aircraft have been stationed at Stansted airport in Essex at the request of the CAA and eight more requisitioned in Qatar’s capital Doha.
Monarch bosses have held talks with other airlines including easyJet and its Hungarian low-cost rival Wizz over a possible rescue deal and have been in frenzied negotiations over a vital Atol license that allows the company to sell package holidays.
The Civil Aviation Authority, which hands out the licences, said last night it would make a decision by 4pm today.
A CAA spokesman said: ‘We can confirm 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.’
Government sources said preparations have already begun for a ‘mass repatriation’ of passengers should the worst happen
Last year, the CAA gave Monarch a 12-day extension to prove it was financially sound enough by securing new funding. It was saved by a £165 million cash injection. But sources said the airline’s situation had worsened since then.
‘There is a storm in the airlines market and Monarch is right at the centre of it,’ said one source. ‘It is very painful and Monarch’s shorthaul business is heavily loss-making, which is not sustainable.
‘Terrorism has meant it has lost significant business in key markets such as Egypt and Turkey. Meanwhile, Brexit means the cost of fuel and aircraft leases, which are paid for in dollars, has rocketed.’
In its most recent accounts, filed in August, Monarch said funding issues were among ‘material uncertainties’ that ‘may cast significant doubt on the company’s ability to continue as a going concern’.
WHAT WILL HAPPEN IF AIRLINE GOES BUST?
Q What’s gone wrong with Monarch?
A Britain’s fifth-biggest carrier was already limping along a year ago, but was saved in a £165 million bailout by investment firm Greybull Capital. A weaker post-Brexit pound drove up costs and at the same time put many people off foreign travel, placing strain on the firm.
Q We bought our package holiday through Monarch – are we protected?
A Yes, though only about 5 per cent of Monarch’s business comes under the Government-backed Atol protection scheme that covers package holidays. If you’re abroad, other flights will be provided. If you’re still in the UK, you’ll get a full refund.
Q What if we bought only flights from Monarch?
A It is unlikely Atol will cover you, but if you booked flights using a credit card (or Visa debit card) and the cost is more than £100, the card issuer is liable and you can apply for a refund.
A But how will we get home?
A In the past, when airlines failed, other carriers stepped in with discount fares to help get flyers home. Whether you are reimbursed for that extra outlay is likely to depend on your travel insurance.
Q What should I look out for in an insurance policy?
A Some policies offer cover for the failure of an airline or tour operator, referred to as Scheduled Airline Failure Insurance (SAFI). It will cost extra, but will provide peace of mind.
Q I see Monarch is still offering some good deals online – should I take one?
A Provided that the holiday or flight is either Atol-protected, bought with a credit or Visa debit card or is covered by a SAFI clause in your travel insurance and you don’t mind the possibility of extra hassle at the end of your holiday, it could be worth the risk.
Monarch’s owner, Greybull Capital, lead by Nathaniel and Marc Meyohas, are understood to be hoping administration can be avoided and were working late last night with the airline’s chief executive Andrew Swaffield and consultants from top accountancy firm KPMG to save the business.
But one source said failure to secure an Atol license for its package holidays, while only about five per cent of its revenue, could cause customers to lose faith.
The source said losing its license ‘would be a tough blow for the company to withstand’.
Atol protection applies to any package holiday booked while the company is under licence but it must stop selling those products as soon as it loses the licence.
However, its flights are not sold under Atol, so they would not be protected if the company failed.
KPMG was brought in three weeks ago to help look at options and help find potential buyers.
The airline is also understood to have asked about a possible lifeline from Government that would allow it to carry on until it can restructure the business.
Alex Macheras, an aviation analyst, said: ‘If Monarch fails to get its Atol licence renewed, it will need to find a buyer or it is finished.
‘It is neither a low-cost airline like Norwegian or Ryanair nor a holiday operator like Thomson or Thomas Cook. It has ended up somewhere in the middle getting squeezed.’
Last year Monarch flew 6.3 million customers, of which about 100,000 were on package holidays.