Flair Airlines’s chief executive officer tried to assure customers and employees that the Edmonton-based discount carrier is in fine shape, days after four of its 19 aircraft were seized for missed lease payments.
“We’re here to stay,” Stephen Jones told reporters on a webcast press conference call on Monday. “People can book new travel with confidence.”
Mr. Jones assured employees in an e-mail, “We will work through this.”
“This was an incredibly aggressive act, and I am fairly clear that there are interesting motivations behind this – but that is for another time,” he wrote. “Is the airline OK – yes it is,” said the e-mail, a copy of which was obtained by The Globe and Mail.
Aircraft leasing company Airborne Capital seized the four Flair Boeing 737s after Flair fell behind in its lease payments.
In February, Airborne and another lessor, Bank of China Aviation, were offering a total of 11 Flair aircraft for lease to other airlines, according to two people familiar with the situation. The Globe is not identifying them because they are not authorized to speak publicly.
Seven of those aircraft were pulled from the market because Flair paid the amounts owing. The other four were seized on Friday and Saturday, causing 1,900 people to miss their flights at the start of March Break.
Flair has added three backup planes and leased another to be able to fulfill its schedule this week, Mr. Jones said. The airline is caught up on its other lease payments, he added.
The seized aircraft are owned by investors, which include New York firms Marathon Asset Management and Ellington Management Group, and the planes are leased on their behalf by Airborne.
Mr. Jones blamed the investors for the seizures, which he described as “draconian” and “aggressive.”
He called the loss of the planes “unexpected and unusual” because the airline owed a total of about US$1-million on the leases on March 1, an amount he said was small for a company of Flair’s size.
Another source familiar with the situation said Flair had a pattern of missing monthly lease payments dating back to September, and the aircraft were seized because Airborne and the investors wanted to find other lessees. The Globe is not identifying the source because they are not authorized to speak publicly on the matter.
Mr. Jones did not address questions from The Globe about past missed payments at the press conference on Monday, but said, “There is no business that doesn’t have some delays.”
Asked why he did not have backup planes ready when the payment date was missed, Mr. Jones said: “We were only a few days in arrears. It wasn’t a big amount. As a consequence, we didn’t have any aircraft in backup because there was no reason to,” he said.
Marathon and Airborne did not respond to interview requests on Monday. Ellington and Bank of China Aviation declined to comment.
Passengers complained they had no notice of the cancellations and were told they were not due compensation and not offered alternative flights until a week later.
Mr. Jones said on Monday that the airline’s initial response was “unacceptable.” He said passengers are now being treated “above and beyond” the standards set in federal rules, and Flair is working to make sure its customers reach their destinations.
One Flair employee, whom The Globe is not identifying because they are not allowed to speak publicly, said the work force learned of the seizures in news reports, and did not receive an e-mail from the company until later on Saturday. The employee said the workers are nervous jobs are at risk, if the company cannot afford the leases on some planes.
Mr. Jones said Flair is “100 per cent viable.”
An airline is not required to tell the government if it has received a default notice for failing to pay rent on aircraft, Transport Canada spokeswoman Sau Sau Liu said in an e-mail last Tuesday.
“In the event that the aircraft operator loses custody and control of the aircraft, the Transport Canada aviation document that authorizes the operation of the aircraft is deemed cancelled,” Ms. Liu said. Asked how the regulator protects the public interest in such cases, Ms. Liu said, “If the operation of an aircraft is prohibited then the public interest in aviation safety is safeguarded.”
Transport Minister Omar Alghabra was not available for an interview on Monday, his office said.
“Both Transport Canada and our office have been in regular contact with Flair Airlines at the operational level to ensure passengers can make their way home, and that appropriate compensation is provided,” said Nadine Ramadan, a spokeswoman for Mr. Alghabra.