Flair alleges breach of contract, fraudulent misrepresentation in $50M lawsuit against leasing companies

Flair Airlines has filed a $50-million lawsuit against several plane-leasing companies over the "unlawful" seizure of four of its aircraft last weekend, the latest update to the ongoing drama in Canadian aviation after the budget carrier fell behind in its payments.

The filings in Ontario Superior Court state that Airborne Capital Inc. and a trio of affiliated leasing corporations "secretly" 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 alerting or rebooking customers.

The agents arrived at airports in Toronto, Edmonton and Waterloo, Ont., at 3 a.m. EDT on Saturday to confiscate the registration certificates and technical logs on board the aviation equivalent of taking the car keys the company said.

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

The suit in the Ontario Superior Court of Justice is the latest blow in a back-and-forth fight between the discount carrier and lessor Airborne Capital, which stated this week that Flair "regularly" missed payments over the past five months, prompting the plane seizures.

Airborne Capital has said the arrears amounted to millions of dollars, and that it was in regular contact with Flair'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," the company said in a statement Tuesday.

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.

Flair found itself down by more than a fifth of its 19-plane fleet after the aircraft were taken out of operation Saturday, forcing the airline to cancel multiple flights. It scrambled to backfill the repossessed planes with three other jetliners waiting in the wings, and to open a new lease on a fourth.

CEO Stephen Jones has said the disruptions could mean fewer aircraft and a slimmed-down schedule this summer.

The six-year-old company again sought to reassure customers Wednesday, saying in a statement that "all customers can book future travel with us with confidence." It said it will continue to fly routes to 35 destinations mostly in Canada, but including 10 U.S. cities and three Mexican ones.

The airline claims the lessors carried out the seizures despite having made no objection to an arrangement put forward by Flair last Friday to resume payments earlier this week.

Claiming substantial damages, the court filings say Airborne Capital "misled" the carrier and that another company agreed to buy or lease the aircraft. On those grounds, Flair has alleged breach of contract, fraudulent misrepresentation and "conspiracy."

In February or early March, the defendants "secretly co-ordinated and agreed to sell or lease" the planes to a company Flair has dubbed ABC Corp., the Edmonton-based airline alleges. "The identity of ABC Corp. is known to the defendants, but is not known to Flair as at the time this statement of claim was issued."

Responding in an email Wednesday, Airborne reiterated that it "strongly rejects the allegations that have been made by Flair Airlines."

Adding to Flair's woes Wednesday was an announcement from the Ottawa International Airport Authority that it revoked the operating license of the ground-handling company contracted by both Flair and Sunwing Airlines for baggage loading and plane marshalling.

The licence termination is effective 30 days after the notice was issued to Scotland-based Menzies Aviation on Monday.

Flair said in a statement that the action would have no impact on operations.

Menzies and Sunwing did not immediately reply to requests for comment Wednesday.