In a ruling that should allow Flair Airlines to continue selling low-cost flights to Canadians and others, the Trudeau government has ruled that Flair qualifies as a Canadian airline.
The Canadian Transportation Agency issued a statement on its website today, stating that the agency “issued its final determination and found that Flair is Canadian.”
“It’s a fantastic day for team Flair,” president and CEO Stephen Jones said at a press conference today. “‘The question has been answered.”
Global News reports that Jones said the Edmonton-based company “never doubted” that it was Canadian and the decision by the CTA is very clear: “Flair is Canadian.”
Here’s what was posted on the CTA website today.
The Canada Transportation Act (CTA) requires that air carriers holding certain licences issued by the Agency be Canadian, as defined in subsection 55(1) of the CTA. This is a requirement that must be complied with at all times, the agency noted.
On March 3, 2022, the Agency issued a preliminary determination pointed to a number of factors which indicated that 777 Partners LLC (a non-Canadian company) may in fact have control of Flair. These factors included:
- 777’s control of Flair’s Board of Directors,
- 777’s rights exceeding those granted to other shareholders,
- 777’s active role in the management of Flair’s business,
- Flair’s dependence on 777 for its financing and leasing of aircraft.
The Agency provided Flair with a deadline of May 3, 2022 to demonstrate why it is in fact Canadian.
On May 3, 2022, Flair filed its response to the Agency’s preliminary determination which included, amendments to its Unanimous Shareholder Agreement (USA) and Promissory Note (governs the debt arrangement between Flair and 777).
After considering all of the facts, the Agency found that Flair addressed the concerns raised in its preliminary determination. In particular it found that:
- As a result of changes related to Flair’s Board provisions, including composition and quorum requirements, Canadian shareholders now have the right to appoint no less than half of the Board, and no less than half of the members of the Board must be Canadian.
- As a result of amendments to its USA, 777 no longer holds unique shareholder rights.
- Flair has demonstrated it can generate positive cash flow from operations, alleviating concerns it would be dependent on 777 for additional new financing.
- Flair has amended the Promissory Note Agreement with 777 to ensure that debt funding will continue to be available until at least 2026 thereby considerably mitigating 777’s ability to exert influence over Flair.
- Flair has demonstrated that it can lease new aircraft without having to rely on 777.
Flair officials in April said they intended to keep operating.
“I want to be really clear. We will not be grounded as a consequence of this review,” President and CEO Stephen Jones said at the time.
Flair offers low-cost fares within Canada. It also flies to several destinations outside the country, including Chicago, Cancun, San Francisco, Los Cabos, Orlando, and Palm Springs.
