Flair Airlines holds talks to restructure its balance sheet

Article content

Canadian airline Flair Airlines Ltd. is in talks to raise funds to ease the budget carrier’s debt burden, which is burdened by aircraft repossessions, tax arrears and a lender accused of fraud.

Interim CEO Maciej Wilk is in talks with “financial institutions that are not afraid to make a somewhat riskier investment” to participate in an ongoing recapitalization of the low-cost airline, he said in a telephone interview. New lenders or equity would help the airline to manage its considerable debt burden, the amount of which he declined to quantify.

Article content

“To really give us breathing room and the security to continue restructuring the company, I think we would be very happy to get around 100 million Canadian dollars,” Wilk said by phone. “To be clear, it’s not like we urgently need that right now.”

Flair ran into financial trouble after higher costs derailed the company’s efforts to expand quickly once the pandemic subsided. In March 2023, lessors repossessed four Boeing 737 planes – stranding passengers heading for spring break – and its former lead investor, 777 Partners LLC, was accused of fraud in court. Another 777-backed airline, Australia’s Bonza, went into liquidation last month.

Flair still owes the Canadian government tens of millions of dollars in back taxes, the Canadian Press reported in January, after which the company agreed to a payment plan with the Canada Revenue Agency. A legal battle over the planes, which Flair says were “unlawfully” seized by Airborne Capital Ltd., is ongoing.

777 is still a lender to Flair, Wilk said, but its stake has fallen from about 25 percent to less than 10 percent and it no longer has a seat on the board. Advantage Capital Holdings LLC, a New York-based insurance company that held senior rights to collateral tied to 777, has provided support, Wilk said, but declined to provide details.

Article content

Representatives for 777 and Advantage Capital, known as A-Cap, did not respond to requests for comment.

If Flair can secure its finances, the company has a chance to capitalize on its position as the “last man standing” in Canada as competition has waned, Wilk said. In recent months, Lynx Air and Canada Jetlines Ltd. have filed for bankruptcy protection, while the country’s second-largest carrier, WestJet Airlines Ltd., shut down low-cost carrier Swoop last year.

Wilk, a veteran of LOT Polish Airlines, joined Flair last year as chief operating officer and became interim CEO in June. He said the Edmonton-based airline’s fleet ratios have been restructured and the company has new lessors, including SMBC Aviation Capital Ltd., BOC Aviation Ltd. and Jackson Square Aviation LLC.

Wilk wants to increase the number of jets to at least 24 after next summer, up from 20 today, he said. He added that the existing structure could accommodate up to 35 aircraft, including older Boeing 737-800s.

“The competitive landscape has changed dramatically for Flair,” he said. “Now the business case is much more compelling for any investor to consider Flair as an investment target.”

Bloomberg.com

Share this article on your social network