Flair Airlines can stay in the sky after regulator finds company 'is Canadian'

Discount carrier Flair Airlines is allowed to keep its licence after the Canadian Transportation Agency concluded on Wednesday the company "is Canadian."

The Edmonton-based airline was under review by the transportation regulator over concern an American shareholder, Miami-based 777 Partners, exerted too much power.

But the CTA said on Wednesday that Flair "addressed the concerns raised in its preliminary determination" and, with the changes, met the definition of a Canadian airline.

"Though we never doubted it, it's still fantastic to say once and for all: Flair is Canadian," CEO Stephen Jones said at a news conference in Alberta's capital city Wednesday morning.

The investigation into Flair's shareholders' division of power was launched in March.

Over the past two months, Jones said Flair and CTA together went "line by line" through the company's books.

Flair faced having its licence revoked if it could not prove its Canadianess.

"We've made significant concessions ourselves, and 777 Partners have made significant concessions," Jones commented.

The changes include some to Flair's governance: Canadian shareholders must make up at least half of Flair's board, the board chair and each sub-committee chair must be Canadian, and all Canadian directors need to be nominated by Canadian shareholders.

As well, Flair had to demonstrate to the CTA it would not be financially dependent on 777 Partners. The company agreed to ensure a proportion of its aircraft leases are not linked in any way to the U.S. shareholder. It also restructured its debt with 777 Partners, which it says it took on during the pandemic when it did not qualify for bail-out funding from the Canadian government.

"We've really sort of taken away any ability for people to perceive that we could be controlled through the [debt] note. It's not that we were, but the perception sat there, so we've dealt with that."

'WE'RE HERE TO COMPETE'

The changes will not have any impact on Flair's ability to offer low fares, Jones promised.

In fact, other than suggesting Flair's governance document should have been written clearer in 2018, he characterized the CTA review as the result of "wild speculation" and a takedown attempt by competitors.

"There's been such a cozy duopoly here for so long that whenever you stir the pot, whenever you come and spoil the party by actually showing people you don't need to spend $800, you can spend $150 to fly across the country, of course people are going to be upset," Jones told reporters.

"Ultimately, it's invigorating. We love competing. We're here to compete. And we're here to win."

Under the CTA, licensed domestic airlines must be incorporated in Canada and have at least 51 per cent of voting shares owned and controlled by Canadians. No foreign shareholder can own more than 25 per cent of the voting interests.

When the review was launched, 777 Partners was said to own 25 per cent of Flair and Canadian shareholders 58 per cent.

However, the Florida investment firm had funded Flair's day-to-day operations earlier in the COVID-19 pandemic, leased planes to Flair, and once filled the majority of Flair's board seats, leading to the concern it could "influence" Flair's decision making.

According to Jones, resignations of two Canadian board members meant the then-seven member board consisted of two Canadians and three directors from 777 Partners. In the interim, one member from 777 Partners quit, leaving the ratio two to two.

The CEO expects a meeting to be called in June to fill the remaining seats. Although the board has been expanded to nine chairs, 777 Partners will continue to fill only two.

Jones said consumers should be reassured by the CTA's decision, and that Flair was continuing to address criticism of its handling of flight delays and cancellations with extra customer service staffing and automation and better scheduling.

He extended an olive branch to customers in the form of a Flair sale, before closing the news conference by donning an Edmonton Oilers jersey – a nod to the last Canadian team standing in sight of the Stanley Cup – and walking out to the Canada's anthem.