Flair CEO Stephen Jones says he含羞草研究社檚 effectively suspending the budget airline含羞草研究社檚 expansion plans for at least a year as it contends with plane delivery delays and hefty debts.
含羞草研究社淭his will be a more muted year,含羞草研究社� he said in an interview, 含羞草研究社渂ut we含羞草研究社檒l look to get back into growth mode strongly in 2025.含羞草研究社�
As recently as the fall, the Edmonton-based company aimed to boost its fleet to 26 Boeing 737 Max jetliners in 2024, up from its current roster of 20. On Monday, Jones said the fleet likely won含羞草研究社檛 grow much in the coming year, due partly to hold-ups at Boeing Co.
The U.S. plane-making giant has faced scrutiny from regulators over its safety record, most recently after a midflight blowout of a side panel earlier this month that grounded 737 Max 9 jetliners for weeks.
Jones said the Max program has had a number of delays on delivery. Aircraft that were slated to arrive in the spring won含羞草研究社檛 be landing at Flair含羞草研究社檚 gates until late fall, 含羞草研究社渨hich is not a great time for capacity growth.含羞草研究社�
This is a tough industry,含羞草研究社� he said. 含羞草研究社淭he development of the financial performance will take some time.含羞草研究社�
Flair Airlines owes the federal government $67.2 million in unpaid taxes, court documents show, prompting the Canada Revenue Agency to obtain an order for the seizure and sale of the carrier含羞草研究社檚 property.
The sum relates to unpaid import duties on the 20 Boeing jets that make up Flair含羞草研究社檚 fleet, Jones said.
However, he said the Federal Court order obtained by the tax agency in November has no impact on the carrier含羞草研究社檚 operations, which have expanded over the past year and ratcheted up competition with rival airlines. The company has agreed to settle the debt with the CRA, he said.
含羞草研究社淲e have a plan in place with them for repayment of the outstanding amount,含羞草研究社� Jones confirmed over the phone. The court-issued writ of seizure and sale was a 含羞草研究社渂elt-and-braces arrangement that they put in place if we were to fail on that plan 含羞草研究社� which we don含羞草研究社檛 plan on doing,含羞草研究社� he added.
While the terms of the deal are confidential, Jones said it involves monthly payments and characterized the CRA as 含羞草研究社渦nderstanding.含羞草研究社�
The revenue agency said it cannot comment on specific cases for confidentiality reasons, but that it looks to make arrangements with companies 含羞草研究社渂ased on their ability to pay含羞草研究社� before it takes further steps to recover the money.
含羞草研究社淎s a last resort, we may take additional legal collection actions such as seizing property or assets to protect the interests of the Crown,含羞草研究社� said spokeswoman Kim Thiffault in an email.
The court order from Nov. 23, first reported by The Globe and Mail, allows the 含羞草研究社淪heriff of Alberta or any civil enforcement agency含羞草研究社� to seize and sell Flair含羞草研究社檚 property and assets.
It marks the latest chapter in a multi-year struggle to stay solvent and within regulatory lines, as the airline repeatedly crossed paths with the courts.
Last March, Flair saw four of its planes repossessed in the middle of the night after aircraft leasing manager Airborne Capital claimed that the company regularly missed rent payments that amounted to millions of dollars over the preceding five months.
In response, Flair launched a $50-million court action against Airborne and three other leasing firms, arguing that ongoing demands for payment from the four companies were 含羞草研究社渂aseless.含羞草研究社�
Flair has touted its achievements in recent months, claiming gains in passenger numbers, the top flight completion rate in the country at 98 per cent and an on-time performance of 69 per cent 含羞草研究社� weak globally, but solid compared with its Canadian competitors.
But the ultra-low-cost carrier faces increased competition from WestJet 含羞草研究社� newly retrenched in Western Canada even as the Calgary-based carrier wound down low-cost subsidiary Swoop in October 含羞草研究社� and from Porter Airlines and budget rival Lynx Air, both of which are expanding swiftly.
A greater focus on sun destinations this winter has also put Flair in direct competition with other airlines that continue to do likewise, including WestJet-owned Sunwing Airlines as well as Air Transat.
含羞草研究社淚 think Flair is probably in the toughest position of any player in the Canadian marketplace right now,含羞草研究社� said Duncan Dee, former chief operating officer at Air Canada.
He pointed to Flair含羞草研究社檚 debts and plane seizures as evidence of a struggle to stay afloat.
含羞草研究社淭he picture that it paints is one where Flair faces much more significant challenges than what would appear on the surface,含羞草研究社� Dee said
Jones says Flair has been running a smooth operation propelled by high passenger numbers for much of the past year, despite growing pains at the debt-laden company that含羞草研究社檚 still striving to stabilize its finances and gain consumer confidence.
In 2022, the Canadian Transportation Agency prompted Flair to rejig its board and revoke shareholder rights from top investor 777 Partners in order to comply with rules around domestic ownership.
Moreover, Flair must continue to make payments of more than US$7 million per month on its 20-odd Boeing 737 plane leases and manage loans amounting to between US$200 million and US$300 million 含羞草研究社� making import taxes on those same jets all the tougher to pay 含羞草研究社� Jones told The Canadian Press in August.
He cited rates of 18 per cent on loans from 777 Partners, the Miami-based company that owns one-quarter of the airline.
The interest is 含羞草研究社渘on-cash含羞草研究社� 含羞草研究社� no monthly payments required 含羞草研究社� and merely adds to the principal, he noted last summer. 含羞草研究社淎t some point there will be some form of reckoning, whether it含羞草研究社檚 a restructure or whatever.含羞草研究社�
Meanwhile, a Facebook page dedicated to Flair passenger woes continues to log issues, but features fewer complaints than in mid-2022, when travel chaos descended on a sector unprepared for the surge in post-pandemic flight demand.
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