Flair missed ‘millions’ in payments on seized planes, leasing company says
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MONTREAL – The leasing company that seized four planes from Flair Airlines over the weekend said Tuesday the carrier routinely missed payments over the past five months.
Flair found itself down by more than a fifth of its fleet after the Boeing 737 Maxes were confiscated by Airborne Capital Inc. on Saturday, forcing the airline to cancel multiple flights.
Flair has deemed the actions “extreme and unusual,” with CEO Stephen Jones telling reporters Monday the company is now 100 per cent caught up on its leases after being “a few days in arrears” with about $1 million owing on the jetliners.
Jones also claimed the seizure was the result of another carrier’s attempt to undermine Flair following “behind the scenes” negotiations between a major Canadian airline and Airborne Capital.
In a statement, the Dublin-based company said it “strongly rejects the allegations” by Flair.
“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,” Airborne Capital said.
The firm said it was in regular contact with the airline’s representatives about its obligations.
“Terminating an aircraft lease is always a last resort, and such a decision is never taken lightly. In this case, following numerous notices to Flair, it again failed to make payments when due and Airborne took steps to terminate the leasing of the aircraft.”
Plane leases are an increasingly hot commodity amid supply bottlenecks and soaring travel demand, but Airborne Capital said it expects “material losses” linked to the repossession and remarketing of the aircraft.
Jones has also expressed doubt about retrieving the aircraft, saying Monday that “it would be a tough road to see (Airborne) back down — this sort of precipitous hedge-fund behaviour makes negotiations tough.”
When asked whether previous payments on the seized planes had been overdue in the past six months, Jones did not answer directly: “There’s no business, really, that doesn’t have some delays.”
The abrupt seizures and subsequent accusations hint at the fierce competition playing out across the Canadian aviation industry as demand for air travel soars.
The seizures — at airports in Toronto, Edmonton and Waterloo, Ont. — sent Flair scrambling to backfill the flights cancelled Saturday, rolling out three planes from storage or maintenance and swiftly leasing a fourth to avoid further cancellations Sunday. The moves restored its operating fleet to 19, but Jones said it could mean fewer aircraft and a slimmed-down schedule this summer.
Around 1,900 travellers saw their flights cancelled Saturday, with some 420 of them rebooked within three days, Jones said. Others opted for reimbursement.
This report by The Canadian Press was first published March 14, 2023.
Note to readers: This is a corrected story. A previous version stated the missed payments occurred over a six-month period. In fact, the lessor said they occurred within five months.