Flair Airlines failed to make rent payments before planes seized, leasing companies allege

Plane-leasing companies that seized four aircraft from Flair Airlines in 2023 are seeking damages from the budget carrier, alleging it failed to make rent payments by the deadline and ignored repeated default notices.

The allegations were detailed in a statement of defence and counterclaim for $30.9 million US filed in Ontario Superior Court on June 26.

In March 2023, Flair Airlines filed a $50-million lawsuit against Irish-based Airborne Capital Inc. and a trio of affiliated leasing corporations, alleging they "secretly" found a better deal for the Boeing 737 Max aircraft with a third party and then set up Flair for default.

Flair said at the time it received no notice over the "unlawful" seizures, which took place at airports in Toronto, Edmonton and Waterloo, Ont., precluding the airline from alerting or rebooking customers.

The airline then found itself down by more than a fifth of its 19-plane fleet, forcing it to cancel multiple flights.

"The lessors sent agents to seize the aircraft in the middle of the night as passengers were boarding planes for spring break vacations," Flair's statement of claim said.

But Airborne Capital has said that Flair "regularly" missed payments over the previous five months, prompting the plane seizures, and that it had been in regular contact with Flair's representatives about its obligations.

None of the allegations in Flair's lawsuit or the countersuit have been tested in court.

In new court documents, the lessors deny any breach of contract or duty to act in good faith, saying the seizures were necessary to protect the value of the aircraft.

They said the seizures took place at Canadian airports to avoid stranding passengers overseas and were timed overnight to prevent disruption during busier daytime hours.

"Flair's action is an attempt to recover self-inflicted losses arising from its own defaults," the countersuit stated.

"For months, Flair failed to make rent and other payments when due under the leases. It ignored repeated default notices in which the lessors expressly reserved their rights and remedies under the leases, including to terminate the leasing of the aircraft and repossess the aircraft."

The leasing companies said they "repeatedly advised that the continuing arrears were unacceptable."

They also denied that the seizures were related to a more profitable deal with a third-party.

"In fact, it took the defendants several months and significant cost ... to re-market and restore the aircraft to a suitable condition before they could be re-leased or sold," the document stated.

"Two aircraft required major repairs because one or more of their engines were unserviceable due to defects uncovered post recovery from Flair."

In a statement, Flair CEO Maciej Wilk called the counterclaim a "predictable response" to Flair's lawsuit.

"The company does not comment on active litigation, but would like to point out that the claims in question relate to events that occurred over two years ago," Wilk said.

"Flair continues to maintain and cultivate productive and positive relationships with all of its stakeholders, including its customers, lessors and other industry partners and remains focused on executing its strategy and commitment to be Canada's most reliable and affordable airline."