Canadian ultra low cost carrier Flair had four Boeing 737 MAXs seized this past weekend over failure to make lease payments on-time (which the airline initially referred to as a “commercial dispute”). The company’s CEO is now making some pretty serious claims about what happened…
In this post:
How Flair CEO justifies aircraft seizures
Flair CEO Stephen Jones has made some interesting statements about what has happened at the Edmonton-based airline over the weekend. Jones acknowledges that the airline was several days behind on a $1 million lease payment to Airborne Capital, the company from which it was leasing 737 MAXs.
While there are all kinds of airlines with financial issues, it’s exceedingly rare to see planes seized, as that’s usually only done as a last resort, when an airline has a history of not making payments on-time. It almost never happens if a company is just a few days late with a payment once. After all, leasing companies want their planes flying.
Jones is making quite a claim about what happened, arguing that he thinks that Airborne Capital was working with one of Canada’s biggest airlines to undermine Flair:
“We have come in and upset the cozy duopoly, and as a consequence people want us out of business. We do believe there were negotiations going on behind the scenes between one of the majors and the lessor to, you know, hurt Flair by offering above-market rates for the aircraft we have been leasing.”
“There are airlines out there that don’t want Flair to exist, and it doesn’t surprise me. We are a challenger to the status quo.”
Jones hasn’t provided any evidence of this, and hasn’t named the airline he suspects to be working with the leasing company.
This is a serious claim to make…
I have respect for Flair, and the fact that the airline is trying to disrupt Canadian aviation with ultra low fares. However, the accusations that Jones is making are pretty serious. Arguing that a leasing company and a competing airline are working together to try to seize the carrier’s planes isn’t an accusation that should be taken lightly.
Does Jones know something he’s not revealing, or is this a case of “our competitors must hate us, so surely they’re behind this?” Regardless, it’s a bold claim to make…
Fortunately the truth will come out soon enough. Air Canada claims that it “has not spoken to any of the lessors nor have they come to Air Canada offering their aircraft.” That leaves WestJet as the other major airline in Canada, so I guess we’ll see soon if WestJet picks up these 737 MAXs.
One thing is for sure — if there’s no merit to this claim, then this is a very bad look for Flair. And no matter how you slice it, it’s a bit alarming if an airline lacks the liquidity to make an aircraft lease payment. If Flair executives had reason to believe that the leasing company and a competitor were conspiring to seize planes, why wasn’t making on-time lease payments more of a priority?
Bottom line
Canada’s Flair had four of its jets seized over the weekend, leading to flight cancelations, and questions about the carrier’s financial situation. The airline was allegedly several days late on a $1 million lease payment, though one has to wonder if there’s more to the story.
Flair’s CEO is now claiming that he believes the leasing company and a competitor were conspiring to have these planes seized, offering to pay above market rates in order to hurt Flair.
What do you make of the claims of Flair’s CEO?
Time to let some grown up airlines into the mix
I think Julia nailed it. This wasnt a few days but 4 to 6 months arrears in rent. Hardly a "cheque's in the mail" occurrence. ExFlairie's description of Stephen Jones was word for word what my ex boss who interviewed with F8 and Jones had to say. He didnt get the job probably because his knowledge and experience in the industry would have been a bit too much for Jones' tiny ego. You just had...
I think Julia nailed it. This wasnt a few days but 4 to 6 months arrears in rent. Hardly a "cheque's in the mail" occurrence. ExFlairie's description of Stephen Jones was word for word what my ex boss who interviewed with F8 and Jones had to say. He didnt get the job probably because his knowledge and experience in the industry would have been a bit too much for Jones' tiny ego. You just had 4 airplanes repossessed and you're telling your pax that it was an unscheduled maintenance event??? REALLY? Things have got so bad in YYZ I was forced to use Air Canada Vacations which I have never done before. :(0. WG used to be a fantastic airline until they got rid of their seasoned, well respected and liked and highly competent CEO because little Hunter wanted to play CEO. WS has decided their fortunes rest with flying 789s out of Grand Prairie and dumped E Canada. The industry up here is a mess with the shining beacon being AC. Oy!
Flair has been behind on its payment for months:
https://www.theglobeandmail.com/business/article-flair-airlines-seized-missed-payments/
It sounds like the CEO is in denial that there is a problem at the airline. Rather than buckling down and asking how he can fix it he simply buries his head in the sand and engages in blame shifting. I sure wouldn't book a ticket with them right now.
While I am all for ULCCs trying to make a go of it in Canada...
Flair has been behind on its payment for months:
https://www.theglobeandmail.com/business/article-flair-airlines-seized-missed-payments/
It sounds like the CEO is in denial that there is a problem at the airline. Rather than buckling down and asking how he can fix it he simply buries his head in the sand and engages in blame shifting. I sure wouldn't book a ticket with them right now.
While I am all for ULCCs trying to make a go of it in Canada I think its hard to do so here. Our cities are farther apart than in other parts of the world where they succeed. It's not so easy to plan a weekend trip to another part of Canada like you can in say SE Asia or Europe. The few times I did look into booking Flair in the past for some weekend trips the scheduling didn't make it work. That means they have a narrow window to make profits every year (March break, summer and Christmas). We also lack the population to support a robust airline industry.
Having watched over the years what Air Canada (then government) did to Wardair, Canadian Airlines and some others by unfair competition or outright route theft it doesn't surprise me in the least that skullduggery is part of this issue.
At one point Canadian Airlines was in trouble and American was going to inject cash through partial ownership to save them. Air Canada forced the government to block the investment by American. A couple of years...
Having watched over the years what Air Canada (then government) did to Wardair, Canadian Airlines and some others by unfair competition or outright route theft it doesn't surprise me in the least that skullduggery is part of this issue.
At one point Canadian Airlines was in trouble and American was going to inject cash through partial ownership to save them. Air Canada forced the government to block the investment by American. A couple of years later when Air Canada was going broke (justifiably) they forced the government to change all the rules so they could be saved by injections of foreign cash.
Pretty fishy, even for Canadian politics. (Note - western based airlines get the shaft, eastern based get the gold).
Don’t forget that West jet was taken private recently by a Canadian conglomerate called Onex corp . This would be Canadas Blackrock. It is a very greasy and aggressive corporation so this is completely plausible especially after the meltdown WestJet experienced this winter. They would love to replace their older 737s with these maxs.
I used to work for Flair, and my god, Stephen is going to run this airline into the ground. I have never met somebody more arrogant in my entire life. I cannot wait for him to get a defamation lawsuit for these comments. Man screams SDE and this shows. Pay your leases ontime. Also you still owe me $1000 in missing wages, how about answer your emails.
Rumor was that WestJet previously declined to lease or buy planes originally destined for Flair since it would require repainting and retrofitting. Doesn't really make sense to me that WS would suddenly be buying planes when they had the offer back in Dec.
https://www.theglobeandmail.com/business/article-airlines-summer-travel-demand-canada/
While I a happy for a disrupter to challenge the Canadian duopoly, Flair has a pretty fire operating record. They also hide behind any excuse not to refund/rebook passengers whose flights are significantly disrupted.
They really need to decide what they are, who they serve and present a product reliable enough to book.
Other than those seeking the cheapest seats, Canadian frequent flyers are very leery about their contracts being fulfilled.
Unfortunately.
Sean M. --- I agree that the lessor would love to remarket the aircraft --- so why is Flair giving them the opportunity? Seems very sloppy --- the CFO isn't on top of this?
This rumour has been out there ever since the news of the groundings broke. I have no doubt that the fundamentals are true - Flair has "too cheap" leases locked in at the bottom of the market and the lessor wants any excuse to repo and remarket the aircraft.