Monarch Airlines handed reprieve to fly package holidays

The Civil Aviation Authority has extended Monarch Airlines' ATOL licence for 12 days, amid "negative speculation" over the future of the airline.

The budget carrier was handed the extension after shareholders agreed to provide additional funding.

It now has until 12 October to satisfy the CAA that it has the finances to secure a full renewal of its ATOL licence.

The extension comes after Monarch was forced to deny "negative speculation" it was in financial trouble .

In a statement, Monarch said it received "significant" investment from its shareholders and is "close to announcing the largest investment in its 48-year history".

Monarch chief executive Andrew Swaffield said he was "excited about the additional capital coming into the group which will help us fund our future growth."

He added he was "delighted" to agree the deal to extend the firm's ATOL licence.

ATOL protection ensures customers don't lose money or become stranded abroad if a travel firm collapses.

The CAA said it would "continue to monitor" the Luton Airport based airline during the period of extension.

Despite tougher market conditions, Monarch said it expected to make £40m in pre-tax profit by the end of its financial year in October.

It is understood Greybull Capital, the carrier's owners, is in discussions with several interested parties about a potential takeover deal.

Greybull bought a 90% stake in the airline as part of a £100m rescue deal in 2014.

Brian Strutton, general secretary of the British Airline Pilots Association, said the licence extension is "good news for the pilots, crew, staff and customers".

He added: "Although the Monarch licence has been extended temporarily for 12 days, my understanding is this will be sufficient to satisfy the regulator that long term funding is secure and details of this will emerge over the next few days."