Flair Airlines has filed a lawsuit against multiple lessors, spearheaded by Airborne Capital, seeking CAD $51 million (USD $37 million) in damages and naming a third party it claims made a covert deal for the four aircraft confiscated over the weekend.
Flair Airlines reported to local media on Sunday that four of its B737 MAX were seized by lessor Airborne Capital over the weekend due to a business disagreement.
Flair Airlines, the ultra-low-cost carrier of Canada, leases six B737-8 MAX from Airborne Capital. According to the aircraft tracking service ADS-B, on March 11, C-FLKA (MSN 64943) was confiscated in Edmonton, and C-FLKC (MSN 61807) was confiscated in Toronto. However, both aircraft are now back in service.
By March 14, the airline reported on social media that all services were operating normally again.
“We are committed to service for our passengers and are proud to have returned to normal operations across our network. Travellers can be assured Flair Airlines will continue to fly its schedule, and book new travel with confidence.”
On the other hand, C-FLKD (MSN 61806) remains parked at Kitchener since March 10, and C-FLKI (MSN 64944) remains parked in Edmonton since March 10.
Conflict of Interest
According to Flair, increased demand for B737 MAX aircraft has led to higher lease rates for the type. In other words, the lessors understood that if they cut ties with Flair, they could get better rates elsewhere.
Lessors allegedly found a better deal leasing or selling the aircraft to ABC Corporation, then framed Flair for a technical default, terminated the leases unlawfully, and seized the aircraft “on the purported pretence of relatively insignificant amounts that the lessors alleged had been outstanding for only a matter of days.”
Flair’s Lawsuit Claims
The main accusations are “breach of contract, breach of the duty of good faith in contractual performance, negligent and/or fraudulent misrepresentation, wrongful seizure, conversion, and conspiracy”.
The claim states that the defendants “secretly coordinated and arranged to sell or abandon the aircraft to ABC Corporation” in February or early March 2023.
Claiming that a third party offered a better lease deal, which led to the cancellation of Flair’s contracts, the airline has filed a claim in Ontario Superior Court for CAD $50 million (USD $36.3 million) plus CAD $1 million (USD $726,758) in punitive damages against affiliated lessors Columba Lights Aviation Limited, Corvus Lights Aviation Limited, MAM Aircraft Leasing 4 (Ireland), Airborne Capital, and ABC Corporation.
In the wake of having four of its planes seized for lease nonpayments, discount airline Flair Airlines is in a three-front battle for its survival, air industry experts say.https://t.co/diMOhuaIGK
— Toronto Star (@TorontoStar) March 19, 2023
Flair claims it had a deal with the lessors to pay them within a few days, but on Saturday morning at approximately 3:00 a.m., the lessors seized the planes.
“The seizures were orchestrated in a bad faith and malicious manner that inflicted the maximum possible harm on Flair, including by interfering with its passenger relationships and trust.”
Airborne did not want to comment on the complaint, so it pointed to an earlier statement in which the company categorically denied Flair’s claims.
Airborne issued a statement earlier that refuted Flair’s account of events, claiming that the airline was millions of dollars behind in lease payments over a period of five months. Top Airborne officials stated they were in constant touch with Flair during this whole time, yet payment delays and lease violations continued nevertheless.
A global recession seems to be imminent in the coming months. Payment defaults and alternative opportunity costs could foster an environment of unethical business practices. Whether Flair’s payment defaults are justifiable or Airborne’s severing the contract for a better opportunity is ethical is debatable.
Is Flair’s lawsuit or Airborne’s seizure justifiable? Share your valuable views below.