Boeing swoops in to save Monarch with restructured fleet deal
Boeing looks set to swoop in and rescue low-cost airline Monarch, with a multimillion pound financing package.
Monarch had been given a two-week extension by the Civil Aviation Authority (CAA) to its permit to sell holidays and flights in the UK, as the firm said it was on the cusp of lining up its biggest cash injection to date. The authority was initially reluctant to renew its licence because of concerns over its available cash.
The extended licence runs out at midnight on Wednesday – Monarch was given 12 days to finalise the new funding arrangements and it expects the revised fleet purchasing deal with the aircraft manufacturer to be secured by then. It hopes a new annual licence will then be granted.
In a statement on 30 September, the CAA said the extended permit was given "by requiring the shareholder to provide additional funding… Monarch now has 12 days to satisfy the CAA that the group is able to meet the requirements of a full licence".
Read more: Holiday chaos avoided as Monarch handed two-week lifeline
Sky News said that Monarch's deal with Boeing was focused on 45 new planes announced in 2014, that the group had agreed in principle to restructure. Under the restructured purchase agreement, Monarch will be able to enter into sale-and-leaseback arrangements for the aircraft, freeing up cash flow.
Firm orders have been placed for 30 of the new aircraft for delivery from 2018, while the remaining 15 are subject to a future option to proceed.
The terms with Boeing will form part of a £165m investment package that will see Greybull Capital, Monarch's controlling shareholder and turnaround specialist, inject new funds into the firm.
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In September, Monarch said that security concerns and the devaluation of the pound against the euro following the Brexit vote had made market conditions tougher. Like its competitors, the airline has also battled declining demand for package holidays to Egypt and Turkey following terrorist attacks, while air traffic strikes in France have caused further turbulence.