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…
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?
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