The chief executive of Flair Airlines says it may have to trim its capacity after four of its aircrafts were seized over the weekend because of overdue payments.
Flair Airlines CEO Stephen Jones told reporters Monday that while the airline continues to negotiate with Airborne Capital, the leasing company that owns the four planes seized Saturday, "it would be a tough road to see them back down."
"We've come in and upset the cosy duopoly and as a consequence people want us out of business. And we do believe that there were negotiations going on behind the scenes between one of the majors and the lessor to hurt Flair by them offering probably above-market rates for the aircraft we’ve been leasing," Jones said. He did not specify which major airline he believed was negotiating with Flair's lessor, nor did he offer any details to support the claim.
"While I'm not going to name names or cite evidence, I believe there is much more to this picture than the surface that you see."
Four Boeing 737 MAX aircraft were grounded on Saturday after what Flair called a "commercial dispute" with Airborne Capital. Jones said the airline was about $1 million in arrears on the leases, which is approximately half of a day's sales for the airline.
"So it wasn't a big amount. We didn't expect this action and as a consequence, we didn't have any aircraft in backup," Jones said. "There was no reason to, from our perspective."
The move left Flair Airlines scrambling, cancelling flights just as March break began in Ontario. About 1,900 passengers had flights cancelled on Saturday, Jones said, with 420 of those people rebooked for travel within three days. He said the airline's schedule has since returned to normal, after it added three spare aircraft it had in its fleet to its schedule. The airline now has 19 aircraft in its fleet. Before Saturday, it had 22.
Jones said the company is "100 per cent caught up" on its current lease payments.
"I'm not going to pretend things haven't been tight," he said. "But we're keeping... up to date on payments."
Whether the company will be able to continue with its expansion plans remains to be seen. Flair, which began as a charter operator in 2004 but transitioned to a low-cost carrier model in 2017, has been in the midst of an aggressive expansion strategy. The airline previously said it expects to grow to 30 aircraft by mid-2023.
Jones said that will depend on whether the airline is able to secure some or all the aircraft back into the fleet.
"If we can't, and we'll know that shortly, then we'll need to either get more capacity in from other sources and use that, or we'll need to trim our schedule to fit the available capacity," he said.
"We're working through that."
Competition in the Canadian airline market has heated up in recent years, with the launch of low-cost carriers such as Flair, Swoop, Lynx Air and Jetlines.
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.