Ultra low cost carrier Flair Airlines, which is also Canada’s third largest airline, seems to be having some financial issues, as four of its aircraft were seized yesterday. The carrier’s communication surrounding this isn’t doing much to reassure consumers either.
In this post:
Four Flair Airlines Boeing 737 MAX 8s seized at airports
On Saturday, March 11, 2023, Flair Airlines had four Boeing 737 MAX 8s seized at three Canadian airports (Toronto, Edmonton, and Waterloo). For context, the airline has a fleet of 18 aircraft, including 15 Boeing 737 MAX 8s and three Boeing 737-800s.
The airline isn’t doing a whole lot publicly to acknowledge what happened on social media, simply claiming that it experienced “some service disruptions” at three airports.
Meanwhile Flair Airlines is telling the media that these seizures have happened due to a “commercial dispute” with its leasing company, New York-based Airborne Capital. Flair Airlines claims that it has been communicating with the leasing company, and “payment has been initiated.” Per a statement:
“Flair Airlines is aware of extreme and unusual actions taken by a New York-based hedge fund and lessor of certain Flair Airlines aircraft. The airline is aggrieved by this unprecedented action. Flair Airlines will continue to engage in a consensual mediation with the lessor to remedy the situation.”
With these planes now being seized, Flair Airlines claims that it is activating three spare aircraft that it had planned to use in the summer, in order to cover most of the flights that were supposed to be operated by these 737 MAXs.
There will likely continue to be some disruptions in the coming days and weeks, which isn’t ideal timing, given that it’s the start of the busy March holiday travel period.
Is Flair Airlines in financial trouble?
Leasing companies seizing aircraft is highly unusual, and is typically only done as a last resort. Typically a leasing company wouldn’t seize an aircraft if an airline were just late on a payment once.
An unnamed source quoted in the media suggests that Flair Airlines was five days behind schedule on a $1 million aircraft lease payment. If that’s true, why was Flair Airlines behind on a payment? Is the carrier’s financial situation so bad that it couldn’t make a $1 million lease payment on-time?
I can’t help but wonder if there’s more to the story, though. Was the airline five days behind on a $1 million lease payment? Maybe. Was that really the first time that the airline didn’t make a payment on-time? I’m skeptical of that, given the aircraft seizure.
Admittedly we’re coming out of winter now, which is the toughest period financially for any Canadian ultra low cost carrier, given that there’s not as much travel happening in winter, both due to school holidays and the weather. So maybe the airline was having some seasonal liquidity issues… who knows.
One thing is for sure — this does quite a bit to damage the reputation of Flair Airlines, both among consumers and among potential business partners. Consumers might be skeptical to book with the airline, worried if there are major financial issues that could lead to their flights being canceled. Meanwhile I can’t imagine this helps with Flair Airlines getting attractive financing rates in the future.
Bottom line
Flair Airlines had four Boeing 737 MAXs seized this weekend by its leasing company. The airline is sort of trying to sweep what happened under the rug, and minimize what caused this. However, it’s incredibly rare for aircraft leasing companies to seize planes without repeated issues with an airline.
Flair Airlines will now reactivate three jets that were otherwise parked for winter. I imagine this will cause a not-insignificant number of flight cancelations, so if you’re flying Flair Airlines, keep a close eye on your itinerary.
What do you make of what’s going on at Flair Airlines?
It looks like this is by design by scum AC, who is trying to disrupt Flair on the busiest weekend of the year in Ontario travel.
https://globalnews.ca/news/9548294/flair-airlines-ceo-seized-planes-lease-rival/
I’m booked on Flair Flight F8 523 from Ft Lauderdale Fl to Waterloo ON this afternoon at 1:05. Haven’t heard from Flair by email regarding the status of this flight, cannot check in for some reason and cannot reach them by phone. Does anyone know if this flight is going or not? So frustrating!
Ben, could you write an article on what happens when a plane is seized? How is this technically done?
I do logistics for living, so that’s the angle I am most interested in.
Does a lessor send a flight crew to the airport to wait for plane to arrive, so as to fly it away right away? Is this a contract crew, or someone who actually works for the lessor? Or does the lessor go...
Ben, could you write an article on what happens when a plane is seized? How is this technically done?
I do logistics for living, so that’s the angle I am most interested in.
Does a lessor send a flight crew to the airport to wait for plane to arrive, so as to fly it away right away? Is this a contract crew, or someone who actually works for the lessor? Or does the lessor go to Air Canada or West Jet, or some other airline that has the same type, and go “Listen, we want to contract a crew to fly planes from this airport tomorrow, do you have someone who is available and willing?” Does this mean that, say, Air Canada would know in advance, and, oh by the miracle have an extra plane in hand that is flying the same routes that seized plane was about to fly, full fare undiscounted tickets only… ?
My understanding is that planes don’t have keys, like cars do, but are there codes that need to be changed? What about refueling, do they just pay commercial rate at the airport once they take possession of the plane? Do the leasing companies have their own call signs (if they contract another airline to fly these planes out, I guess they can use this airline’s call sign?)? Where do the planes end up, while they are waiting for a new lease? Is there a C-check or similar before a plane is leased out again? Is there police on hand and a lawyer with a heap of papers saying “You’ve been served?”
Everyone in the news is saying that planes were seized, but it’s so far rather thin on actual details. Are the seized planes still in Toronto/Edmonton, etc?
I've recently seen Flair with $33ow fares from Orlando-Sanford to Toronto. No one can operate at a profit with fares that low.
More details coming out.
Sabotage by AC who are deathly afraid of Flair.
One can speculate all they want but more details are coming. It seems ominous.
This doesn't surprise me. The aviation industry in Canada is too crowded and we don't have the population to support that many airlines.
When you stop paying your mortgage, it usually takes the bank 6 months to act of seizing your house.
Same thing here. This wasn't something that popped up in the past week. Flair has been on thin ice for a long while now, and unfortunately the writing was on the wall.
When creditors seize assests, no one else wants to extend credit. Expect to see fuel companies, Maintenence, training , etc all asking for money up front to supply Flair from now on.
They're done.
Oh, Canada.
Perhaps the check was coming from Silicon Valley Bank...
I have to wonder whether the ULCC are headed towards a tough future. They are dependent upon consumers looking for dirt cheap fares. As their costs rise (with inflation), their customers feeling the impact of rising inflation and be forced to cut discretionary spending, rising credit card defaults and more maxed credit cards what's the future. Not to mention what this will do to their partner cc income-the real driver of profits.
Ultimately the legacy...
I have to wonder whether the ULCC are headed towards a tough future. They are dependent upon consumers looking for dirt cheap fares. As their costs rise (with inflation), their customers feeling the impact of rising inflation and be forced to cut discretionary spending, rising credit card defaults and more maxed credit cards what's the future. Not to mention what this will do to their partner cc income-the real driver of profits.
Ultimately the legacy carriers will be crushed but I think it will start with the ULCC first.