The package holiday arm of Britain's Monarch Airlines is likely to be placed into administration within days if the regulator does not grant the business an extension to its tour operator's licence, Sky News reported on Saturday. The Civil Aviation Authority (CAA) must decide by Sunday whether to extend the travel business's Air Travel Organiser's Licence (ATOL).
Citing unnamed sources Sky News said KPMG has been lined up to act as the administrator if an extension is not granted.
Asked by Reuters to comment on the Sky News report, Monarch said: "We continue to work on plans to determine our optimal future shape, size and strategy. Our flights are operating as normal, carrying Monarch customers as scheduled.
"Our ATOL licence - for packaged holidays - is with the regulator."
The ATOL only covers about 5 percent of Monarch's total business. Flight only bookings, the main part of its business, do not require an ATOL.
The CAA said the ATOL renewal process was on-going and it would conclude the processing of applications from about 1,300 ATOL holders in the next 24 hours.
It said that in certain circumstances this could require a temporary extension to complete this process.
"We will not comment on the specifics of any ATOL holder's application until such time as the process has reached a resolution.
"However, we can confirm that ATOL protection will remain available for eligible holiday bookings made with Monarch on Sunday."
The CAA said it would provide a daily update with regard to the protection that is available to Monarch's customers.
KPMG could not be immediately reached for comment.
On Thursday Monarch, which is grappling with competition from low-cost rivals, said it was talking to potential partners after a report that parts of its short-haul network would be sold.
Tough competition in the airlines sector is putting pressure on the weaker carriers and driving consolidation. Air Berlin and Alitalia have both filed for insolvency this year and are seeking new investors for parts of their business.
A year ago, Monarch secured a 165 million pound ($221 million) lifeline from majority shareholder Greybull Capital.