Flair sues for $50M over seizures

Leasing company defends repossessing planes, saying airline was months behind on payments

Flair Airlines is suing an Irish leasing company for $50 million alleging breach of contract and “negligent and/or fraudulent misrepresentation” over the seizure of four of its planes last week.

The lawsuit, filed in the Ontario Superior Court Tuesday against Airborne Capital and several affiliated companies, says that Flair had already agreed to pay an overdue amount when its jets were seized at 3 a.m. Saturday, over what it called a “technical” breach of its lease agreement.

“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 suit alleges. “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.”

Airborne declined to comment on the lawsuit, instead pointing to a written statement Tuesday that said the planes were only seized after a five-month period.

“The leasing of the four Airbornemanaged aircraft was terminated following a five-month long period, during which Flair was regularly in default of its leases by failing to meet its payments when due, with payment arrears reaching millions of dollars,” Airborne said Tuesday.

“Throughout this period, senior Airborne executives were in direct and regular contact with representatives of Flair, reminding them of their legal obligations. However, missed payments and lease defaults persisted,” Airborne added Tuesday. “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.”

Flair’s suit also claims that airlines are often in arrears on lease payments for planes.

“It is very common for airlines to be in minor, and, in many cases, major arrears, in respect of the various payments due under aircraft leases, without lessors taking enforcement action,” the suit claimed.

That claim was met with skepticism by some air industry experts.

“It all depends on what you mean by ‘very common.’ That term is way too loose for me. If you tell me it’s 20 per cent of the carriers, I’d say (no way). If you mean one per cent, maybe,” said John Gradek, a former Air Canada executive and head of McGill University’s Global Aviation Leadership Program.

The allegations haven’t been tested in court, and Airborne has not yet issued a statement of defence.

The four airplanes were seized from airports in Toronto, Edmonton and Waterloo Region on Saturday morning.

The lawsuit says that Flair had already agreed to pay an overdue amount when four of its jets were seized at 3 a.m. on Saturday