The future of Monarch, the UK’s fifth largest airline, hangs in the balance with a 24-hour extension to its licence to sell package holidays due to expire at midnight on Sunday.

As the under-pressure holiday operator held emergency talks with the industry regulator, Monarch said it was business as usual on Sunday but offered no insight to passengers with future travel plans.

Responding to concerned customers on Twitter, the company would only say: “Our flights are operating as scheduled today. Any changes to the forward schedule will be communicated to all customers.”



Monarch (@Monarch) Hi, our flights are operating as scheduled today. Any changes to the forward schedule will be communicated to all customers. ^PC

Monarch (@Monarch) Hi Kerry, our flights are operating as scheduled today. Any changes to the forward schedule will be communicated to all customers. ^BL

The airline also appeared to have raised the prices of its flights substantially in a matter of hours. On Sunday morning, Monarch was charging £132 to travel from Gatwick to Barcelona on Wednesday 4 October – more than double the cheapest equivalent flight from rival easyJet and four times as much as the cheapest fare on Norwegian. According to the Independent, on Saturday night Monarch was charging just £32 for the same flight.

Hiking prices to such an extent overnight – and effectively pricing itself out of the market – could be seen as a move to limit its exposure if the company does collapse.

The Civil Aviation Authority is understood to have put a fleet of planes on standby to ensure Monarch passengers are not stranded abroad should the low-cost airline go under. Up to 100,000 customers are currently believed to be overseas.



Meanwhile KPMG is thought to be lined up to handle a potential administration.

Monarch’s Air Travel Organisers’ Licence (Atol) expired at midnight on Saturday, but the CAA granted the company a lifeline by allowing it to sell Atol-protected holidays for another 24 hours.

The CAA said: “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.”

The CAA will have to announce by midnight whether or not it is renewing Monarch’s licence. A further 24-hour extension is another possibility.

Atol protection gives consumers the peace of mind that they will be given a refund if a travel firm collapses and will not be left stranded abroad. It is only Monarch’s package holiday business that requires Atol protection, which accounts for about 5% of revenues. However, industry sources said a failure by the CAA to grant a new licence would undermine confidence in its wider business and potentially lead to its collapse.



In the event the regulator does not renew or grant an extension to the licence, Monarch would no longer be able to sell Atol-protected holidays and industry insiders suggest the package holiday part of the business is likely to go into administration on Monday. Holidaymakers already abroad and Atol-protected would be offered an alternative flight home.

It would then be up to Monarch’s board to decide whether or not to put the whole group – including its airline and engineering businesses – into administration, with the hope of finding a buyer for all or part the business. Monarch customers already on holiday who paid for a flight only are unlikely to be Atol-protected, and would therefore have to find an alternative flight home. It is possible that other airlines would step in and offer flights at discounted prices.

British Airways’s owner, International Airlines Group, has expressed an interest in acquiring some of Monarch’s take-off and landing slots, fleet and crew, according to a Sky News report, raising hopes that some Monarch jobs could be saved in the event of a collapse. A spokesperson for IAG declined to comment.



Monarch has also been holding talks with rival airlines easyJet, Wizz Air, and Norwegian Air about a possible sale or opportunities to form joint ventures.

Monarch was in a similar position a year ago, when it was granted a last-minute reprieve from its majority shareholder, Greybull Capital, which injected £165m into the business. It is thought unlikely that Greybull will repeat such a move.

The airline industry has come under greater pressure after a series of terrorist attacks has made passengers more reluctant to travel to certain destinations.

An industry insider said it had been a challenging time for Monarch and the short-haul industry.

“Terrorism has created huge over capacity in the short-haul market, with fewer people wanting to fly to Egypt and Turkey, while the big operators have increased competition on key routes to Spain and Portugal.

“You also have Brexit and a weaker pound, so it’s a combination of factors, with terrorism being the main one.”

Facebook Twitter Pinterest A Monarch flight attendant serves snacks. Photograph: Alex Segre/Alamy

Monarch is headquartered at London Luton and employs more than 2,700 people, mainly based in the UK. Last year it flew more than six million people to over 40 destinations in Europe and further afield. In the UK, it flies from London Gatwick, Birmingham, Leeds-Bradford and Manchester, as well as Luton.