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Flair launches $50M lawsuit against leasing companies following plane seizures

Flair Airlines has filed a $50-million lawsuit against several plane-leasing companies over what it claims were unlawful seizures of four of its aircraft over the weekend.
Flair Airlines has filed a $50-million lawsuit against several plane-leasing companies over what it claims were unlawful seizures of four of its aircraft over the weekend. A Flair Airlines plane is seen in this undated handout photo. THE CANADIAN PRESS/HO, Flair Airlines *MANDATORY CREDIT*

Flair Airlines has filed a $50-million lawsuit against several plane-leasing companies over the "unlawful" seizure of four of its aircraft over the weekend.

The filings in Ontario Superior Court state that a trio of leasing firms found a better deal for the Boeing 737 Maxes with a third party and then "set Flair up" for default, amounting to an illegal termination of leases.

"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," the statement of claim reads.

"The lessors sent agents to seize the aircraft in the middle of the night as passengers were boarding planes for spring break vacations."

Flair said it received no notice, precluding the discount carrier from alerting or rebooking customers. The agents arrived at airports in Toronto, Edmonton and Waterloo, Ont., at 3 a.m. EDT to confiscate the registration certificates and technical logs on board — the aviation equivalent of taking the car keys — the company said.

None of the allegations in Flair’s lawsuit have been tested in court.

The suit in the Ontario Superior Court of Justice is the latest blow in a back-and-forth fight between the discount carrier and its lessors, with leasing management company Airborne Capital stating this week that Flair "regularly" missed payments over the past five months, resulting in the plane seizures.

Airborne Capital — one of five defendants — has said the payment arrears reached millions of dollars, and that it was in regular contact with Flair's representatives about its obligations.

"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," the company said in a statement Tuesday.

Plane leases are an increasingly hot commodity amid supply bottlenecks and soaring travel demand, but Airborne Capital said it expects "material losses" linked to the repossession and remarketing of the aircraft.

Airborne did not immediately respond to requests for comment about the lawsuit on Wednesday.

Flair found itself down by more than a fifth of its 19-plane fleet after the aircraft were taken out of operation Saturday, forcing the airline to cancel multiple flights. It scrambled to backfill the repossessed jets with three other jetliners waiting in the wings, and to open a new lease on a fourth.

Flair CEO Stephen Jones has said the disruptions could mean fewer aircraft and a slimmed-down schedule this summer.

The airline claims the lessors — Columba Lights Aviation Ltd., Corvus Lights Aviation Ltd., and MAM Aircraft Leasing 4, all based in Ireland — carried out the seizures despite having made no objection to an arrangement put forward by Flair last Friday to initiate payment earlier this week.

Claiming substantial damages, Flair further says Airborne Capital "misled" the carrier and that another Dublin-based company agreed to a deal to buy or lease the aircraft. On those grounds, Flair has alleged breach of contract, fraudulent misrepresentation and "conspiracy."

In February or early March, the defendants "secretly co-ordinated and agreed to sell or lease" the planes to a company Flair has dubbed ABC Corp., the Edmonton-based airline alleges. "The identity of ABC Corp. is known to the defendants, but is not known to Flair as at the time this statement of claim was issued."

Adding to Flair's woes Wednesday was an announcement from the Ottawa International Airport Authority that it revoked the operating license of the ground-handling company contracted by both Flair and Sunwing Airlines for baggage loading and plane marshalling. The licence termination is effective 30 days after the notice was issued to Scotland-based Menzies Aviation on Monday.

Flair said in a statement that the action would have no impact on operations.

Menzies did not immediately reply to requests for comment Wednesday.

This report by The Canadian Press was first published March 15, 2023.

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Christopher Reynolds, The Canadian Press