The “Is Flair Canadian?” saga continues with The Canadian Transportation Agency (CTA) issuing an update to its investigation, saying that it will make a final decision about the ultra low-cost Edmonton-based airline on June 1.
The CTA is reviewing Flair Airline's response, issued May 3, that addressed the agency’s preliminary determination that found that Flair’s 25-per-cent owner, Miami-based 777 Partners, held dominant influence over the company.
Flair is currently embroiled in a licence review from the CTA, which believes the carrier may be controlled by U.S. investors in violation of Canadian law.
“The Panel will consider all evidence and if it determines at the end of the process that Flair is not Canadian, Flair's licences would be suspended,” the CTA wrote in an updated statement posted to its website.
The agency noted that it does not comment on its determinations “as they speak for themselves.”
Under the Canada Transportation Act, a domestic airline’s foreign investment cannot exceed 49 per cent or 25 per cent by a single entity. Also, a non-Canadian exert cannot control an airline, or as the CTA puts it, “control in fact.”
Flair is “here to stay"
But at a press conference on April 21, Flair CEO Stephen Jones reiterated that Flair is “here to stay.”
The CEO called the CTA’s claims for “control in fact” a “subjective test” that does not have a clear point of transgression.
“It’s not like we could see this line and we consciously walked over it. The control-in-fact test is the sum total of all of the relationships that an airline might have with a non-Canadian. And that’s a judgment call,” Jones said.
Nonetheless, Flair has since rejigged its board of directors, expanding the board to nine seats up from five, Jones said.
Flair’s board will now have seven Canadian members, with two roles reserved for U.S.-based 777 Partners, down from three previously.
The airline has also taken steps to refinance its debt to reduce the company’s foreign influence.
Now, that “significant” debt to an American investor, under the new structure, remains a concern, Jones suggested.
“Flair has already successfully refinanced nearly Canadian $80 million of its debt to 777 Partners. The refinancing of the balance of our debt will take some time, however. It is for this reason alone that we have sought a time-bound, 18-month exemption from the (Department) of Transport,” Jones said.
Flair, meanwhile, has refinanced some $80 million of debt from 777 already, Jones said last month.
He did not reveal how much is owed, but noted that “it’s a significant amount.”
The CEO is also looking at possibly taking Flair public.
“We would like to bring the company to the market. It depends on our performance in the end, the conditions in the market at the time, but we would hope that’s sooner rather than later,” he said.
Flair announced ambitious plans in early 2021 to grow its fleet to 50 aircraft by 2025, leasing the first 13 of the Boeing 737 Max jets from 777 Partners.