Flair Suspending Growth Plans amid Delivery Delays and Debt

[Stable_Approach]

https://www.bnnbloomberg.ca/a-tough-ind ... 5.amp.html

Flair CEO Stephen Jones says he's effectively suspending the budget airline's expansion plans for at least a year as it contends with plane delivery delays and hefty debts.

[lostaviator]

I find the loan figures interesting.

20 planes. 189 seats. Four sectors each per day (based on flight radar and is VERY generous). = 15,120 seats / day = 453,600 / month.

So $15 of each ticket sold goes to paying lease payments alone. Not including the other 300 million in debt.

Yes I know this isn’t the most accurate way to run numbers without asm info pm but it’s some quick napkin math to show $10 air fares just don’t work.

[PostmasterGeneral]

I find the loan figures interesting.

20 planes. 189 seats. Four sectors each per day (based on flight radar and is VERY generous). = 15,120 seats / day = 453,600 / month.

So $15 of each ticket sold goes to paying lease payments alone. Not including the other 300 million in debt.

Yes I know this isn’t the most accurate way to run numbers without asm info pm but it’s some quick napkin math to show $10 air fares just don’t work.

Not to mention they have what, 7-8 airplanes parked right now?

[Stable_Approach]

I find the loan figures interesting.

20 planes. 189 seats. Four sectors each per day (based on flight radar and is VERY generous). = 15,120 seats / day = 453,600 / month.

So $15 of each ticket sold goes to paying lease payments alone. Not including the other 300 million in debt.

Yes I know this isn’t the most accurate way to run numbers without asm info pm but it’s some quick napkin math to show $10 air fares just don’t work.

67 million is owed to the taxman who already has the order to start repossessing and selling assets should the payment plan fall through.

[lostaviator]

I think it will be more than that agreement falling through in the next few months. It’s kinda hard to seize assets when you barely have any. If the tail number chart I have found online is correct, all but 3 of their tails are leased. I don’t think the CRA can take things that are actually owned by someone else. As soon as you take the few assets they own, any sort of reputation in the loan market they might have will be gone.

[fish4life]

I think it will be more than that agreement falling through in the next few months. It’s kinda hard to seize assets when you barely have any. If the tail number chart I have found online is correct, all but 3 of their tails are leased. I don’t think the CRA can take things that are actually owned by someone else. As soon as you take the few assets they own, any sort of reputation in the loan market they might have will be gone.

It could be anything. Computers, buildings etc

[boeingboy]

They do own spare parts.....

LOL - they will show up one morning to find their planes were not repossessed - but they are up on blocks cause the wheels were!

[rooster]

They do own spare parts.....

LOL - they will show up one morning to find their planes were not repossessed - but they are up on blocks cause the wheels were!

Making a joke like this at the expense of the many fellow pilots that work there, whose careers hinge on their success tells me exactly what kind of person you are.

You're a real winner boeingboy. Grow up

[Blackdog0301]

They do own spare parts.....

LOL - they will show up one morning to find their planes were not repossessed - but they are up on blocks cause the wheels were!

Making a joke like this at the expense of the many fellow pilots that work there, whose careers hinge on their success tells me exactly what kind of person you are.

You're a real winner boeingboy. Grow up

Anyone who continues to work at Flair has seen the warning signs for well over a year now. If they choose to continue working for a dying company, that's their choice. The wheel joke made me laugh. Sorry not sorry.

[DanWEC]

The thing is, Flair is in a unique situation, much different from the basic financial structure of the other failed small airlines. Simply put, they won't go under because they've run out of startup capital, the business will just continue to operate on a loss and 777 will continue to pay the bills. There is no rock bottom.

This must be structured in a way that 777 is making money off the leases, and also writing off debt to Flair, making it advantageous for them.

This is a tiny holding for 777 compared to their others, I'd only be worried about an eventual shift of strategies and reshuffling.

[digits_]

The thing is, Flair is in a unique situation, much different from the basic financial structure of the other failed small airlines. Simply put, they won't go under because they've run out of startup capital, the business will just continue to operate on a loss and 777 will continue to pay the bills. There is no rock bottom.

This must be structured in a way that 777 is making money off the leases, and also writing off debt to Flair, making it advantageous for them.

This is a tiny holding for 777 compared to their others, I'd only be worried about an eventual shift of strategies and reshuffling.

That must be one magical company to thrive on losses and CRA repos...

[cdnavater]

I find the loan figures interesting.

20 planes. 189 seats. Four sectors each per day (based on flight radar and is VERY generous). = 15,120 seats / day = 453,600 / month.

So $15 of each ticket sold goes to paying lease payments alone. Not including the other 300 million in debt.

Yes I know this isn’t the most accurate way to run numbers without asm info pm but it’s some quick napkin math to show $10 air fares just don’t work.

Also, your napkin math assumes 100% load factor

[Tbayer2021]

The thing is, Flair is in a unique situation, much different from the basic financial structure of the other failed small airlines. Simply put, they won't go under because they've run out of startup capital, the business will just continue to operate on a loss and 777 will continue to pay the bills. There is no rock bottom.

This must be structured in a way that 777 is making money off the leases, and also writing off debt to Flair, making it advantageous for them.

This is a tiny holding for 777 compared to their others, I'd only be worried about an eventual shift of strategies and reshuffling.

I think I get what you're trying to say. But that strategy always has an expiry date. Specially when it's not just that the company isn't making money, but that they owe 3rd parties and even the government. Didn't a fuel provider refuse to top them up unless they paid up front?

[Tbayer2021]

https://www.bnnbloomberg.ca/flair-ceo-b ... -1.2029002

Interesting how the CEO is now dodging the question about profitability, even though he said they were far from it not long ago. But at the same time, keeps reiterating that they're bringing affordable travel to Canadians. While it may be affordable, they won't be able to keep providing it if they're not making any money at it.

[rooster]

I find the loan figures interesting.

20 planes. 189 seats. Four sectors each per day (based on flight radar and is VERY generous). = 15,120 seats / day = 453,600 / month.

So $15 of each ticket sold goes to paying lease payments alone. Not including the other 300 million in debt.

Yes I know this isn’t the most accurate way to run numbers without asm info pm but it’s some quick napkin math to show $10 air fares just don’t work.

You do know that not EVERY seat sells for $10 right? I'm quite shocked at how many here believe that's how ULCC's work. Let me explain. Flair advertises YYC-LAS for $30. Well maybe 20 seats sell at that price (it's the bait deal). The next set of available seats will actually sell for $79 (still cheap). Then once those seats are gone, the next set goes for $199 and so on.

The math significantly changes when you factor that in.

[rooster]

They do own spare parts.....

LOL - they will show up one morning to find their planes were not repossessed - but they are up on blocks cause the wheels were!

Making a joke like this at the expense of the many fellow pilots that work there, whose careers hinge on their success tells me exactly what kind of person you are.

You're a real winner boeingboy. Grow up

Anyone who continues to work at Flair has seen the warning signs for well over a year now. If they choose to continue working for a dying company, that's their choice. The wheel joke made me laugh. Sorry not sorry.

So because they believe Flair will succeed and choose to ride it out, that's a them problem? Wow. According to the avcanada experts, Flair was a dying company since the beginning of 2017. It is 7 years later and ya'll still foaming at the mouth waiting for their demise. Charming.

[Tbayer2021]

I find the loan figures interesting.

20 planes. 189 seats. Four sectors each per day (based on flight radar and is VERY generous). = 15,120 seats / day = 453,600 / month.

So $15 of each ticket sold goes to paying lease payments alone. Not including the other 300 million in debt.

Yes I know this isn’t the most accurate way to run numbers without asm info pm but it’s some quick napkin math to show $10 air fares just don’t work.

You do know that not EVERY seat sells for $10 right? I'm quite shocked at how many here believe that's how ULCC's work. Let me explain. Flair advertises YYC-LAS for $30. Well maybe 20 seats sell at that price (it's the bait deal). The next set of available seats will actually sell for $79 (still cheap). Then once those seats are gone, the next set goes for $199 and so on.

The math significantly changes when you factor that in.

https://www.youtube.com/watch?v=72hlr-E ... roductions

This person does a fantastic job at distilling airline pricing methodology to an easily understandable 12 minute video.

[Old fella]

Has to be unsettling for the employees there who probably have inside knowledge and read what’s going on with their employer in the media. We all hope things come out the other side intact however there are countless examples where you are working one day and next morning wake up to hear doors closed and planes parked. Having said that the guys/gals who fly for Flair are no doubt dedicated/ decent folks with a great background. Undoubtedly any airline here in Canada should be quite happy to take them.

[fish4life]

https://www.bnnbloomberg.ca/flair-ceo-b ... -1.2029002

Interesting how the CEO is now dodging the question about profitability, even though he said they were far from it not long ago. But at the same time, keeps reiterating that they're bringing affordable travel to Canadians. While it may be affordable, they won't be able to keep providing it if they're not making any money at it.

They are clearly pushing the “making travel affordable/ we saved Canadians “xxx” dollars as a way of making the government/ other airlines the bad guys when it inevitably goes bankrupt when in reality the business model doesn’t work

[a2btrail]

New interview by the CEO: https://www.youtube.com/watch?v=Y5YWV0wh3es

[rudder]

Anytime a CEO has to state publicly “everything is under control”, typically it is not.

There are many third party issues in play.

So Flair employees can hope for the best, but should consider contingency plans if a third party decides time has run out.

There is only one carrier in Canada that continues to appear in the headlines with issues such as missed payments, aircraft repossession, and now CRA tax arrears. If you work for that carrier then you have been forewarned.

[cdnavater]

With the government possession order, 777 is no longer first in line in case of bankruptcy, not to mention as time goes on with Flair not paying anything on the debt at 18% added to the loan equity, at some point the amount owing will factor into the ownership control equation.
How long before 777 cuts their losses and calls in the loan, redirects their leases.
One thing is indisputable, Flair would be done along time ago if not for the deep pockets of their US investor!
I do not envy Flair pilots and personally would be looking elsewhere if I were younger and had time to start over.

[lostaviator]

I find the loan figures interesting.

20 planes. 189 seats. Four sectors each per day (based on flight radar and is VERY generous). = 15,120 seats / day = 453,600 / month.

So $15 of each ticket sold goes to paying lease payments alone. Not including the other 300 million in debt.

Yes I know this isn’t the most accurate way to run numbers without asm info pm but it’s some quick napkin math to show $10 air fares just don’t work.

You do know that not EVERY seat sells for $10 right? I'm quite shocked at how many here believe that's how ULCC's work. Let me explain. Flair advertises YYC-LAS for $30. Well maybe 20 seats sell at that price (it's the bait deal). The next set of available seats will actually sell for $79 (still cheap). Then once those seats are gone, the next set goes for $199 and so on.

The math significantly changes when you factor that in.

I’m aware. That’s why I called it napkin math and stated it’s hard to know accurate figures without rasm and casm figures. Which we will never know for a private company.

I’m actually going to revise my figures since SJ is quoted as stating they have a 90% load factor. $17 of each ticket is going to lease payments alone. Even for seats being sold at 199, that makes it tough to make money when the largest costs aren’t even being considered.

Here’s what we know:

Flair was behind on lease payments.

Flair was behind on cra accounts.

SJ wouldn’t didn’t answer the “are you profitable” question on BNN earlier today stating instead that they are a private company. Even WJ/Onex have no issues stating when they are profitable or not. You can answer that question without using numbers. My guess is, he didn’t want to lie on national television as that would probably come back to bite him as ceo in any bankruptcy disputes with creditors.

[rookiepilot]

The thing is, Flair is in a unique situation, much different from the basic financial structure of the other failed small airlines. Simply put, they won't go under because they've run out of startup capital, the business will just continue to operate on a loss and 777 will continue to pay the bills. There is no rock bottom.

Really. Interesting analysis.

[Blackdog0301]

Making a joke like this at the expense of the many fellow pilots that work there, whose careers hinge on their success tells me exactly what kind of person you are.

You're a real winner boeingboy. Grow up

Anyone who continues to work at Flair has seen the warning signs for well over a year now. If they choose to continue working for a dying company, that's their choice. The wheel joke made me laugh. Sorry not sorry.

So because they believe Flair will succeed and choose to ride it out, that's a them problem?

Yes. Leafs fans go through the same thing every year too, but you don't see anyone sympathizing with them. If you are in a relationship, and your partner time and time again cheats on you, but you continue to be with them anyways, that's your problem. No one is forced to be a part of something. You rise together, you fall together.