Thousands of tourists were left stranded after Canadian low-cost carrier Flair Airlines had four planes seized.
The Boeing 737 Max airplanes were seized by New York-based hedge fund Airborne Capital on Monday — two in Toronto, one in Edmonton and a fourth one in Waterloo — on Saturday due to missed lease payments, Canadian outlet CTV News reported.
Flair CEO Stephen Jones said that nearly 1,300 passengers had been affected.
A source told the outlet Flair Airlines was behind on payments worth nearly $1m but was not expecting the seizure, despite warnings on Friday by Airborne Capital that it wanted to end leases of the aircrafts. Airborne Capital told The Independent that payment arrears surpassed the million dollars.
“Flair Airlines is aware of extreme and unusual actions taken by a New York-based hedge fund and lessor of certain Flair Airlines aircraft,” a spokesperson for the low-cost carrier said. “The airline is aggrieved by this unprecedented action.”
Flair Airlines said in a statement that it had rebooked customers with other airlines at no cost.
“Customers affected by today’s events will receive an update that we have enlisted a dedicated team to support them rebook their flights with Flair, or another airline,” the company tweeted.
“Alternatively, customers can rebook their own travel and receive a reimbursement from Flair within 7 days. We sincerely apologize for this disruption, especially during a busy travel weekend, and we thank our customers for their patience.”
“Roughly a million dollars in slightly overdue lease payments,” Mr Jones told CTV. “We really want to find a conceptual solution with the lessor on this because we think that the dispute is minor and the actions were unwarranted.”
The low-cost carrier said it was planning to use three planes initially set to be activated in the summer.
A spokesperson for Airborne Capital told The Independent that the measure was a last resort following a five-month-long period “during which Flair was regularly in default of its leases, by failing to meet its payments when due, with payment arrears reaching millions of dollars.”
“The leasing of the four Airborne-managed aircraft was terminated following a five-month long period, during which Flair was regularly in default of its leases by failing to meet its payments when due, with payment arrears reaching millions of dollars,” a statement read.
“...Terminating an aircraft lease is always a last resort, and such a decision is never taken lightly. In this case, following numerous notices to Flair, it again failed to make payments when due and Airborne took steps to terminate the leasing of the aircraft.”
According to John Gradeck, a professor at McGill University’s school of aviation, most low-cost airlines lease airplanes because it is the most affordable way to expand their services.
“These airplanes are hundred million dollar airplanes each, so unless you have a lot of cash in your pocket, which most of these carriers don’t have, their easiest way to get these aircraft operating is leases,” Mr Gradeck told CTV.
The airline said on Monday that its operations were back on track after bringing four additional planes into service.
“Flair will fly and we will thrive. We will continue to deliver the lowest fares on offer to Canadians,” a statement read.
