Friday 16 December 2016 10:15 am

Monarch forecasts 35 per cent profit fall amid turbulent trading environment

Budget airline Monarch has said that profits will slump 35 per cent this year, as it battles a turbulent environment for airlines.

It said the year had been a difficult one and that group performance was in line with its expectations, predicting full-year earnings of £48m – down by over a third on last year's of £74m.

Security concerns affecting demand for destinations such as Egypt, Turkey and Tunisia, have been a particular headache for the firm.

Last month, Monarch said it was suspending all flights between the UK and Sharm el-Sheikh indefinitely "with no indication from the government as to when the airport will reopen flights".

It cancelled all bookings for winter 2016-17, with no plans for the destination to be part of Monarch's summer programme next year.

Chief executive Andrew Swaffield had said it was "very disappointing that we are still unable to fly there", and Monarch would assess whether to start flights and holidays again, "if and when" the airport reopens.

Despite this, the airline said it remained "well-positioned to weather ongoing industry challenges" and new bookings for summer 2017 were up 40 per cent on the previous year. Monarch has growth in bookings for the likes of Portugal and Spain, as well as the Canaries, over the last 12 months.

In October, the airline's majority shareholder Greybull Capital swooped in to invest £165m to allow Monarch to renew its membership of the Air Travel Organisers' Licensing (Atol) scheme and meant the airline could invest in new aircraft.

Greybull bought a majority stake in Monarch in 2014 with an investment of £125m.

Swaffield said in the face of what was arguably "the toughest trading environment ever faced" by the industry, "Monarch enters 2017 in a strong position" thanks to the October investment, continuing cost control and beefed up marketing.