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A Flair Airlines flight arrives in Edmonton on April 23, 2022.Megan Albu/The Globe and Mail

An aircraft leasing company has seized four planes operated by Flair Airlines for non-payment, causing the cancellation of several of the Canadian discount carrier’s flights at the start of the busy March break travel season.

Working with bailiffs, the leasing company, Dublin-based Airborne Capital Ltd., on Saturday issued lease termination notices to Flair representatives and grounded four Boeing 737s: two at Toronto Pearson Airport, one in Edmonton and one in Waterloo, Ont. Airborne also leases to Flair another two 737s, which have not been seized.

Flair’s chief executive, Stephen Jones, said in an interview that the Edmonton-based airline owes about US$1-million on the leases and decried the seizures as “draconian.”

”We feel pretty aggrieved,” Mr. Jones said. “We think the the impact of these actions on our crews and communities is unwarranted. But we are where we are.”

He said Flair fell behind in its lease payments after a “tough” winter on some routes and has “had to manage cash very closely.”

“Going through the winter, we have at times had to have discussions with them about terms of lease payments.”

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Flair leases six planes from Airborne and another five from Bank of China Aviation. Both leasing companies were approaching other airlines to take on the leases for the 11 Flair Boeing 737 passenger jets as recently as February, according to two people familiar with the situation. The Globe and Mail is not identifying them because they are not authorized to speak publicly on the matter.

Mr. Jones said Flair recently paid its arrears to the Bank of China, but failed to come to an agreement with Airborne on four planes.

The aircraft that were being shopped around – 10 737 Max and an older 737 NG – were offered to several airlines, domestic and foreign. Because the aircraft are certified to fly in Canada, they are more attractive to a domestic airline because of the fewer licensing steps required to put them in service.

Canadian airlines that fly the 737 Max include Air Canada, WestJet Airlines, Lynx Air and Sunwing Airlines. The airlines declined to comment.

State-owned Bank of China Aviation declined to comment. Airborne Capital did not respond to questions.

The Boeing 737 Max sells for about US$50-million and is leased to airlines for monthly charges of about US$350,000 to US$400,000.

Before the lease terminations, Flair had 19 737s in its fleet.

One of the cancelled Flair flights on Saturday was Casey Green’s. She and her two children had just arrived at Pearson for their flight to Palm Springs, Calif., when she learned in an e-mail that the flight was cancelled.

Flair offered to rebook her flight in a week or give a refund within 30 days and told her she was not owed any compensation because the cancellation was because of a “maintenance delay.”

“This is the only time I get to travel,” said Ms. Green, who works for a school board, in an interview. “It’s now or never.”

They were going to visit the children’s grandparents for March break: “We were all crying.”

(After the Globe published Ms. Green’s account, Flair contacted her to put her on a flight over the weekend.)

Robert Cannone, a teacher, was also supposed to be on his way to Palm Springs on Saturday. He had tickets to a tennis match, a rental car waiting and plans to visit restaurants. Instead, he is out of all that money and is looking for another way to spend March break: “It is kind of ruined,” Mr. Cannone said.

He describes himself as a frequent flyer, but vows to never take Flair again. Instead, he’ll fly with a bigger airline that has more frequent flights in case something goes wrong, even if it costs more.

“And I’m going to tell my friends this. I wouldn’t risk this for an affordable flight,” he said. “Never Flair, ever.”

Flair plans to fly more than 6,200 flights in July and August, a 46-per-cent increase over the same months in 2022, according to data provided by Cirium. Mr. Jones said in December, when the fleet consisted of 19 planes, that Flair would have enough aircraft by the summer.

Mr. Jones told reporters in a news conference on March 7 that the airline would be adding six planes to its fleet and made no mention of the possible loss of the aircraft. He said new routes and more flights were on the way.

“Some really great expansion coming into our network,” Mr. Jones said.

His promise of six new planes is fewer than the eight he had previously said were to be delivered. This, he said, is because of “both the aircraft availability and our view of the market and pilot availability for that matter. So was a considered decision, but there’ll be six aircraft.”

“We still have the overall goal of getting to 50 aircraft by 2025,” Mr. Jones said. “So we’ll just pace ourselves towards that.

“But frankly, if we got to 45 or we got the 55, I don’t think it would be that much of a difference because the goal is really to prove out the low cost carrier model in Canada. And that’s to say it doesn’t change on one or two aircraft.”

The Globe reported in December that the airline’s U.S. investor, 777 Partners, sold five new 737 Max 8 aircraft, painted in Flair colours, to leasing company Babcock and Brown Aircraft Management. The planes have since been leased to airlines in Canada and Europe. Flair’s investor, 777 Partners, did not respond to e-mailed questions.

An aircraft lease is usually eight to 12 years in duration, sometimes longer, and is typically only terminated because of non-payment. The ages of the Flair planes shopped around by the leasing companies range from a few months old to less than two years. The one exception is one 737 NG, which is almost 13 years old.

It’s been an eventful few years for Flair, including rapid expansion, a legal battle with a Canadian investor and a regulatory review that threatened its operating licence.

The U.S. investor, 777 Partners, bought shares in privately owned Flair in 2019. In early 2021, Flair said it would lease 13 Boeing 737 Max planes from 777 Partners, and its fleet that would grow to 50 in five years as the airline added new routes.

The airline last year underwent an investigation by the Canadian Transportation Agency, which had issued a preliminary finding that the airline might not be Canadian because of the control exerted by 777 Partners, Flair’s major lender and provider of leased aircraft that also controlled the board of directors. The Globe and Mail has reported Flair owed $129-million to 777 Partners in late 2020.

The CTA, in its final ruling, said Flair was Canadian and allowed to retain its licence after making changes to its board, leasing arrangement and sources of financing.

No foreign party can own more than 25 per cent of a Canadian airline and total foreign investment cannot exceed 49 per cent.

The CTA said in a statement on Thursday that Flair’s financial arrangements are confidential and declined to comment.

Shortly after Flair’s expansion plans were announced, Flair and Prescott Strategic Investments Ltd., its large Canadian investor, began a legal battle with each other. The lawsuit, subject to a sealing order and publication ban sought by Flair, includes Prescott’s fight to obtain a court order forcing Flair to buy Prescott’s shares “at a certain value,” according to the Court of Appeal for British Columbia.

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