Monarch Airlines is seeking to secure £35m (€42.61m, $47.07m) in the form of a facility, a formal financial assistance by a lending institution to a company requiring operating capital. This was disclosed by its parent firm Monarch Holdings in accounts filed with Companies House, the UK's registrar of companies.
The company has said it could consider taking this short-term loan either from its owner Greybull Capital, which acquired a 90% stake in the airline in 2014, or from a third-party lender. Andrew Swaffield, the chief executive at the short-haul airline, said the funds were required to survive the winter period, the dullest for all airlines.
The requirement comes at a time when the travel industry has been affected by terrorist attacks over the past year. It also follows the UK deciding to leave the European Union, which could mean airlines will no longer be able to fly freely across Europe, a situation which could hurt the revenues of Monarch and other carriers, according to the Telegraph.
The loan requirement comes at a time when Monarch has posted a pre-tax profit of £19.2m for the year ended October 2015, a stark improvement from the £57.3m loss it posted a year earlier
Swaffield said issuing a going concern warning in its annual is not "unusual" and it had done so even in its 2014 annual statement. "The business has been heavily returned to profit but unsurprisingly profit and cash are not the same thing," he said, adding that the point the company was making was that it was "still dependent, unsurprisingly, on support" from its shareholder.
The CEO argued that retuning to profit had in fact prompted the airline to seek external funding. "We thought that this would be a good time to go out and talk to the capital markets and see if this was the right time for Monarch to seek some external funding," he said. He was however not too optimistic of the decision and said amid the Brexit uncertainty it was likely that the airline would raise the funds from Greybull rather than an external lender.