Flair Airlines (F8, Kelowna) has welcomed a final Canadian Transportation Agency (CTA) ruling that the ultra-low-cost carrier meets the country's Canadian ownership rules, which puts an end to questions over its authority to fly.
"With the receipt of today's positive ruling from the Canadian Transportation Agency, Flair Airlines is proud to be officially recognised as a fully Canadian airline and looks forward to continuing to offer Canadians an affordable, sustainable alternative to Canada's 'Big Air' carriers for many years to come," commented Chief Executive Officer Stephen Jones. "While I have no doubt that the 'Big Air' carriers won't be happy to hear today's news, no matter what they might throw at us, we're here to stay," he stated.
Canada's air carrier market is dominated by the duopoly of Air Canada and low-cost airline WestJet which together hold about 80% market share in total departing seats. Jones said Flair Airlines would continue to challenge their stranglehold by providing nearly four million affordable flights in 2022.
In its final ruling, the CTA determined that Flair Airlines had addressed its previous concerns about the influence of the airline's US-based investor, 777 Partners, which has 25% shareholding in the airline. Flair Airlines is 58% owned by Canadian citizens, well above the mandatory 51% threshold. Still, the CTA questioned 777 Partners' influence on the board and its role as financier and lessor of its growing fleet of eleven B737-8s and three B737-800s.
On March 3, 2022, the CTA issued a preliminary determination suggesting that 777 Partners had de facto control of Flair Airlines.
On May 3, 2022, Flair Airlines filed its response which included amendments to its unanimous shareholder agreement (USA) and promissory note (governs the debt arrangement between Flair Airlines and 777). Flair Airlines had made changes to its corporate governance, ensuring the Canadian shareholders appointed no less than half of the board, and no less than half of the members of the board must be Canadian. It also demonstrated it could generate positive cash flow from operations, alleviating concerns it would be dependent on 777 for additional new financing.
Flair Airlines further amended the promissory note agreement with 777 to ensure that debt funding would continue to be available until at least 2026, thereby considerably mitigating 777's ability to exert influence over Flair.
The CTA said Flair Airlines had also demonstrated that it could lease new aircraft without relying on 777.
