A Flair Airlines Boeing 737-800 jet takes off from Vancouver International Airport on March 5, 2021.Bayne Stanley/The Canadian Press
The leasing company that seized four Flair Boeing 737s on the weekend said it did so only after the Edmonton-based discount airline “regularly” defaulted on millions of dollars in payments over a five-month period.
The lessor, Airborne Capital of Dublin, worked with bailiffs to repossess four of Flair’s 19 jets late Friday and early Saturday at airports in Edmonton, Toronto and Waterloo, Ont. Officials issued lease-termination notices that grounded the planes, and took the maintenance records and other documents ahead of one of the year’s busiest travel days.
Flair chief executive officer Stephen Jones said he was surprised by the seizures. He said it was “aggressive” and “draconian,” and directed by impatient New York hedge funds because Flair was just US$1-million behind in its payments. He also said rival airlines are behind the move to reduce Flair’s fleet for competitive reasons.
“It was a real surprise to me,” he said.
But in a statement issued on Tuesday, Airborne said it “strongly rejects” Mr. Jones’s statements, and says the amount owed was in the millions of dollars.
“The leasing of the four Airborne-managed aircraft was terminated following a five-month-long period, during which Flair was regularly in default of its leases by failing to meet its payments when due, with payment arrears reaching millions of dollars,” said Airborne, in its first public comments on the matter.
“Throughout this period, senior Airborne executives were in direct and regular contact with representatives of Flair, reminding them of their legal obligations. However, missed payments and lease defaults persisted.”
Flair declined to comment on Airborne’s statements.
Mr. Jones, in an hour-long webcast to the airline’s employees on Monday, said Flair missed “a series” of payments to Airborne before the seizures. He said Flair paid $4.2-million to the lessor on Feb. 28, and told Airborne that the balance of US$1-million would be sent the week of March 13, Mr. Jones said.
Instead, the lessor and bailiffs took control of four Flair Boeing 737s “in the dark of night.”
Airborne did not say exactly how much was in arrears and said it had no further statements to make.
Mr. Jones’s description to his employees of the events and the financial transactions offer more details than his recent comments to reporters. The Globe and Mail reviewed audio of his webcast.
One source told The Globe that Flair had a history of missed payments dating back several months. The Globe is not identifying the source because they are not authorized to speak publicly on the matter.
In response to employee questions, Mr. Jones assured them that the airline would be able to fulfill its summer schedule, even with the reduced fleet, had the support of its big U.S. investor and had made all outstanding payments on its other leased aircraft.
“And we intend to keep it that way,” Mr. Jones said. He said Flair has replaced the four seized aircraft with three spares and another leased plane, and looks forward to a busy summer.
“Everyone’s going to be paid on time,” he assured employees.
Two sources say Airborne and another leasing company, Bank of China Aviation, in February were shopping around a total of 11 of Flair’s 19 737s. The Globe is not identifying the sources because they are not authorized to speak publicly on the matter. Seven of these aircraft were recently pulled from the market. Mr. Jones has said Flair’s U.S. investor 777 Partners paid the amounts owing, adding it to the debt Flair owes.
Miami-based 777 Partners did not respond to e-mailed questions.
The Canadian Transportation Agency in 2022 began an investigation of Flair because 777 Partners appeared to be controlling the company, in violation of Canadian rules. The CTA would eventually declare Flair a Canadian company after the airline agreed to reduce its dependence on 777 Partners for financing and aircraft leases, and add more Canadians to the board of directors.
CTA spokesman Vincent Turgeon said the regulator monitors Flair for anything that might change its Canadian status. This includes its financing “and looking into the information made public over the last few days about Flair’s fleet,” Mr. Turgeon said in an e-mail.