Flair Airlines (F8, Kelowna) is suing several lessors led by Airborne Capital for CAD51 million Canadian dollars (USD37 million) in damages and has named a third party it alleges offered a secret deal for the four aircraft that were seized at the weekend. Airborne declined to comment on the lawsuit but referred to a previous statement in which it strongly rejected Flair's allegations.
According to the docket, the aircraft involved are now confirmed to be one B737-800, C-FFLA (msn 36548) and three B737-8s: C-FLKI (msn 64944), C-FLKD (msn 61806) and C-FLRS (msn 61808). Each lease agreement designated Airborne Capital as the agent to act on behalf of the lessors.
Flair has lodged its claim of CAD50 million (USD36.3 million) plus CAD1 million (USD726,758) in punitive damages at Ontario Superior Court against affiliated lessors Columba Lights Aviation Limited, Corvus Lights Aviation Limited, MAM Aircraft Leasing 4 (Ireland), Airborne Capital, and ABC Corporation - the third party it alleges offered a better lease deal which led to the cancellation of Flair's contracts. "The identity of ABC Corporation is known to the defendants but is not known to Flair at the time this statement of claim was issued," the docket reads.
Charges include "breach of contract, breach of the duty of good faith in contractual performance, negligent and/or fraudulent misrepresentation, wrongful seizure, conversion, and conspiracy".
Flair claims that in February or early March 2023, the defendants secretly coordinated and agreed to sell or lease the aircraft to ABC Corporation, terminate Flair's lease agreements, and repossess the aircraft during a busy travel weekend without any notice to Flair, to cause the maximum possible damage and disruption to its business, operations and reputation. "As expected and intended by the lessors and Airborne, the seizures of the aircraft received press coverage that harmed Flair's reputation," it stated.
Flair said lease rates for B737 MAX aircraft had increased as the model was in high demand. The lessors knew they could obtain higher rates if they terminated their agreements with Flair. It claims the lessors found a better deal leasing or selling the aircraft to ABC Corporation, then set Flair up for a technical default, unlawfully terminated the leases 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."
"The lessors sent agents to seize the aircraft in the middle of the night as passengers were boarding planes for spring break vacations. The lessors gave Flair no notice whatsoever, which precluded Flair from notifying passengers or making alternative arrangements for its scheduled flight plans. Flair has incurred and will continue to incur substantial damages as a result of the defendants' malicious conduct," the docket reads.
In an earlier statement, Airborne contested Flair's version of events, saying the airline had been in arrears for five months, totalling millions of dollars in late lease payments. Senior Airborne executives claimed to have been in direct contact with Flair throughout this period but missed payments and lease defaults had persisted.
However, Flair claims that Airborne only delivered the first default notices on February 22, 2023, for two amounts of USD2.1 million and USD2 million, respectively. It demanded that the amounts be paid before 1200 EST (1600Z) on March 6, 2023. In the default notice, the lessors said they had the right to repossess the aircraft but allegedly made it clear that they had no intention to do so. By March 6, Flair had paid the total amount of USD4.2 million, believing it had paid all outstanding dues.
Still, on March 9, Airborne communicated that more than USD1.2 million had still been outstanding for nine days. On March 10, Flair President and CEO Stephen Jones confirmed to Airborne that all outstanding payments would be made early in the week of March 13, and "in correspondence that followed, Airborne said nothing about terminating the lease agreements or repossessing the aircraft," the airline said.
Remedies sought are to cover, amongst other things, lost profits; damages resulting from harm to Flair's business, operations and reputation; damages resulting from service providers taking action against the airline following news of the seizures; and damages that may be incurred to replace the aircraft.
Meanwhile, adding to the airline's woes, the Ottawa International Airport Authority on March 15 revoked the operating licence of the ground handler Menzies used by Flair and Sunwing Airlines (WG, Toronto Pearson) for aircraft marshalling and baggage handling, citing a decline in service levels.
