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UK airline Monarch has warned that its profits will be down by 35% this year, describing the current trading environment as the "toughest ever".

Just months ago there were fears for its future, which were put to rest by a £165m investment boost from its majority shareholder, Greybull Capital.

Monarch said its full-year earnings were expected to fall from £74m to £48m in 2016.

But it added it was "well positioned to weather ongoing industry challenges".

The airline said new bookings for summer 2017 were up by 40% on the year before.

Chief executive Andrew Swaffield said: "The record investment in the business announced in October, enhanced marketing initiatives including our first TV advertising campaign in three years and continuing cost control means Monarch enters 2017 in a strong position."

The financing from Greybull in October allowed the airline to renew its membership of the Air Travel Organisers' Licensing (Atol) scheme - the scheme that refunds customers if a travel firm collapses.

It also meant the airline could invest in new aircraft.

Greybull Capital is Monarch's majority shareholder and is also known for its steelworks.

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