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

Flair Airlines can stay in the sky after regulator finds out that the company is ‘Canadian’

Flair Airlines was allowed to keep its license after Transport Canada concluded on Wednesday that the airline was “Canadian”.

The Edmonton-based airline was under review by the transportation regulator due to concern of the US shareholder, Miami-based 777 Partners, which wields too much power.

But the CTA said on Wednesday that Flair had “addressed the concerns raised in its initial decision” and with the changes, it has stuck to the Canadian airline’s definition.

“Although we’ve never doubted it, it still feels great to say once and for all: Flair is a Canadian,” CEO Stephen Jones said at a news conference in the Alberta capital on Wednesday morning.

An investigation into the power-sharing of Flair shareholders began in March.

Over the past two months, Jones said, Flair and the CTA have walked “line by line” through the company’s books.

Flair faced having her license withdrawn if she could not prove she was Canadian.

“We’ve made major concessions ourselves, and 777 Partners have made major concessions,” Jones commented.

Changes include some of Flair’s governance: Canadian shareholders must make up at least half of Flair’s board of directors, the chairman and each subcommittee chair must be Canadian, and all Canadian directors must be nominated by Canadian shareholders.

In addition, Flair had to prove to the CTA that he would not be financially dependent on the 777 Partners. The company agreed to ensure that a proportion of its aircraft leases were not linked in any way to the US shareholder. It also restructured its debt with 777 Partners, which it says it seized during the pandemic when it was not eligible for rescue funding from the Canadian government.

“We’ve kind of taken out any ability for people to realize that we can be controlled by [debt] note. It’s not that we were, but the perception was there, so we dealt with that.”

We are here to compete

Jones promised that the changes would have no effect on Flair’s ability to offer lower prices.

In fact, other than suggesting Flair’s governance document should have been written more clearly in 2018, he described the CTA review as the result of “wild speculation” and an attempt at removal by competitors.

“There’s been a warm double monopoly here for so long that the more you stir the pot, the more you come in and spoil the party by showing you don’t need to spend $800, you can spend $150 to travel cross country, of course,” Jones told reporters.

“In the end, it’s refreshing. We love competition. We’re here to compete. And we’re here to win.”

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

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

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 had filled a majority of Flair’s board seats, leading to concern that it might “influence” Flair’s decision-making.

According to Jones, the resignations of two Canadian board members meant that the seven-member board was made up of two Canadians and three directors from 777 Partners. Meanwhile, one member of 777 partners quit, leaving the ratio two to two.

The CEO expects to hold a meeting in June to fill the remaining seats. Although the Board of Directors has been expanded to nine presidents, 777 Partners will continue to hold only two positions.

Jones said consumers should be reassured of the CTA’s decision, and that Flair continues to address criticism over its handling of flight delays and cancellations with increased customer service staff, automation, and better scheduling.

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

2022-06-01 18:33:57

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