Airborne Capital Inc., the leasing company that seized four planes from Flair Airlines over the weekend, said the carrier routinely missed payments over the past five months, essentially contradicting Flair CEO Stephen Jones, who told reporters Monday the company is now 100 percent caught up on its leases after being “a few days in arrears” with about $1 million owing on the jetliners. Flair has subsequently filed a $50-million lawsuit against several plane leasing companies.

According to Flair

The filings in Ontario Superior Court state that a trio of leasing firms found a better deal for the Boeing 737 Maxes with a third party and then “set Flair up” for default, amounting to an illegal termination of leases.

“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 statement of claim reads. “The lessors sent agents to seize the aircraft in the middle of the night as passengers were boarding planes for spring break vacations.”

Flair said it received no notice, precluding the discount carrier from notifying or rebooking customers. The agents arrived at airports in Toronto, Edmonton and Waterloo, Ont., at 3 a.m. EDT to confiscate the registration certificate and technical logs on board – the aviation equivalent of taking the car keys – the company said.

Flair has deemed the actions “extreme and unusual,” with Jones also claiming the seizure was the result of another carrier’s attempt to undermine Flair following “behind the scenes” negotiations between a major Canadian airline and Airborne Capital.

None of the allegations in Flair’s lawsuit have been tested in court.

According to Airborne

In a statement, the Dublin-based Airborne said it “strongly rejects the allegations” by Flair.

“The leasing of the four Airborne-managed 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 Capital said.

The firm said it was in regular contact with the airline’s representatives about its obligations.

“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.”

Material losses and tough negotiations

Plane leases are an increasingly hot commodity amid supply bottlenecks and soaring travel demand, but Airborne Capital said it expects “material losses” linked to the repossession and remarketing of the aircraft.

Jones has also expressed doubt about retrieving the aircraft, saying Monday that “it would be a tough road to see (Airborne) back down – this sort of precipitous hedge-fund behaviour makes negotiations tough.”

When asked whether previous payments on the seized planes had been overdue in the past six months, Jones did not answer directly: “There’s no business, really, that doesn’t have some delays.”

The abrupt seizures and subsequent accusations hint at the fierce competition playing out across the Canadian aviation industry as demand for air travel soars.

The seizures sent Flair scrambling to backfill the flights cancelled Saturday, rolling out three planes from storage or maintenance and swiftly leasing a fourth to avoid further cancellations Sunday. The moves restored its operating fleet to 19, but Jones said it could mean fewer aircraft and a slimmed-down schedule this summer.

“The gloves are coming off”

The Globe and Mail reported that, “At a Flair employees meeting on Monday, Mr. Jones assured employees their paycheques were safe. Asked if he planned to fight back ‘in the media’ and ‘in the court of public opinion,’ Mr. Jones said, ‘Hell, yes. We’ve been a little bit restrained so far, but the gloves are coming off.’”

“He told employees he believes one of the two big Canadian airlines – based in Calgary – conspired to have the planes seized for its own use. ‘This sort of dark ops stuff can take us out and we’re going to call that out publicly,’ he said.”

Previously, Jones has stated Flair’s ambition to be the third largest airline in Canada behind Air Canada and WestJet.

Around 1,900 travellers saw their flights cancelled Saturday, with some 420 of them rebooked within three days, Jones said. Others opted for reimbursement.

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