CEO says Flair Airlines meets federal rules as it works to repay debt owed to U.S. shareholder

The CEO of Flair Airlines argued on Thursday the Edmonton-based company meets federal regulations amid a review by the Canadian Transportation Agency.

On March 3, the CTA raised concerns about the possibility that Flair Airlines' Canadian shareholders did not have full control of the company and that shareholder 777 Partners, based in Miami, Fla., exerted too much power.

In order to be a licensed domestic airline, Flair Airlines must be incorporated in Canada and at least 51 per cent of voting shares must be owned and controlled by Canadians, according to the CTA.

Flair Airlines is incorporated in B.C. and 58 per cent of voting shares are owned by Canadians, CEO Stephen Jones said on Thursday.

However, Jones said the CTA told Flair Airlines its unanimous shareholders agreement did not show Canadian control "explicitly enough."

Jones said Flair Airlines accepted that the document, created in 2018, needed revisions to clarify that, and in consultation with CTA, the company made amendments and "the CTA has confirmed to Flair that these amendments address all of the corporate governance concerns that it has raised."

The airline's new board of directors increased from five to nine and 777 Partners' directors decreased from three to two.

Flair Airlines, however, owes millions of dollars to 777 Partners after the shareholder funded the company's day-to-day operations earlier in the COVID-19 pandemic.

Jones told media Flair Airlines is no longer dependent on 777 Partners and that the Miami-based company "never used the fact that they were providing us cash to exert day-to-day control."

"Flair was not part of the billions in bail-out funding that was provided to Air Canada and other large carriers," Jones said.

"Instead, we turned to our shareholders to survive, and 777 Partners provided a lifeline to protect thousands of jobs from coast to coast and to ensure Flair could continue our mission to provide affordable travel to all Canadians."

In a statement to CTV News on April 12, 777 Partners said: “777 does not control Flair Airlines. As a minority shareholder in Flair, 777 Partners is proud of the support it has provided Flair since its investment, and in particular the unwavering financial support it provided during the pandemic."

Jones said Flair Airlines has already refinanced nearly $18 million worth of debt and that it plans to repay the rest by being a successful and profitable airline, refinancing part of the loans, and eventually, listing Flair on the Toronto Stock Exchange.

In the meantime, Flair Airlines has asked the federal government for an 18-month exemption to sort out its finances.

"The only thing that will remain is the fact that we owe some debt to a shareholder who provided it to enable us to survive COVID, and all we're really asking for is time to refinance that debt and the CTA will form a view on that."

Two airline associations that represent Air Canada, WestJet and other carriers called on Transport Minister Omar Alghabra to reject Flair’s exemption request and warned that a green light would set a “troubling precedent."

Jones said Flair will respond to the CTA by May 3 and that it will not lose its operating licence that day.

With files from The Canadian Press