Lynx was banking on a deal with Flair to help pay off debt: report

New details have emerged that shed some light on what was going on at Lynx Air in the days and weeks leading up to the ultra-low-cost carrier’s demise.

Calgary-based Lynx ceased operations early Monday morning (Feb. 26) after filing for creditor protection.

The “ultra-affordable airline” shut down for a variety of reasons, from financial pressures associated with inflation, fuel costs, exchange rates and regulatory costs to “competitive tension” in the market, as Jim Sullivan, interim CEO of Lynx, explained in a company memo.

But one week before the news was shared, another story was making headlines: whispers that Flair Airlines, a competing ULCC based in Edmonton, was in the final stages of acquiring Lynx. 

READ MORE: From “not surprised” to a “significant blow”: Agents, execs sound off on Lynx shutdown

The merger obviously never happened and any details that went public about it were limited to a handful of unidentified sources that spoke to the mainstream media. 

A new report in the Canadian Press on Tuesday (Feb. 27), however, claims that Lynx, which was drowning in $124.3 million in debt, was hoping that a Flair transaction would go through so it could pay back its investors.

The new information was found in documents filed with the Alberta Court of King's Bench, CP reports.

Flair confirmed with the news outlet on Tuesday that it had, indeed, been in talks with Lynx about “potential business opportunities."

Previously, Flair CEO Stephen Jones, when asked about the deal, downplayed the suggestion of any merger talks with Lynx. 

Flair, these days, has its own stressors to deal with. Recently, it was revealed that the low-cost carrier owes the Government of Canada $67 million in unpaid taxes.

(Arrangements to pay the amount have been made, asserts Jones, who says the situation has no impact on Flair’s operations).

READ MORE: "Difficult news”: Lynx files for creditor protection, final flight set for Feb. 26

Flair’s growth will also slow this year due to delays at Boeing, which is answering to U.S. regulators after a mid-flight blowout of a side panel on board an Alaska Airlines flight earlier this month that grounded 737 MAX 9 planes for weeks.

As of last fall, Flair’s plan was to boost its fleet to 26 Boeing 737 MAX jetliners in 2024, up from 20.

Jones said Boeing’s MAX program has faced a number of delays, saying in a previous interview that planes that were supposed to arrive in spring won’t land at Flair until late fall.

“This is a tough industry," he told CP last month. "The development of the financial performance will take some time."

Sky-high debt

Lynx’s debt was seriously piling up though. Apparently, the carrier also owed $25.6 million in unpaid taxes to the federal government and $47.8 million to trade creditors, according to court documents.

The airline owes another $4.1 million to the Toronto and Montreal airports and $4.5 million to Delta Air Lines for aircraft maintenance and warehousing, CP reports.

Court filings show Lynx has $600 million in liabilities and $429 million in assets.

Last week, Judge John Gill granted Lynx protection under the Companies' Creditors Arrangement Act, which allows firms to restructure their finances and pay off lenders – usually for pennies on the dollar, CP reports. 

Lynx entered the Canadian market in April of 2022 with a promise to improve customer service and grow the low-cost model in Canada.

The carrier’s website listed 23 destinations, including most major Canadian cities and U.S. cities, such as Phoenix, San Francisco, Orlando and Tampa Bay.

The airline had nine Boeing 737 MAX 8 in service, with eight on order, plus 29 Boeing 737 MAX 8-200 on order, according to Cirium, an aviation analytics company.

Flair moves forward

Flair, on Tuesday (Feb. 27), took to its LinkedIn page to address Lynx’s closure and invite the carrier's now out-of-work flight attendants and pilots to apply for jobs at the airline.

“We are saddened by the recent news from Lynx and for the negative impact it will have on its talented staff. The ULCC landscape is a challenging one, and the loss of a fellow disruptor only underscores this,” wrote Flair in a post.

“At Flair, we remain committed to delivering affordable travel to all Canadians. Our people are our greatest asset, and we are focused on building a team of passionate professionals to deliver on our mission. In that spirit, we invite pilots and flight attendants who have been affected by the closure of Lynx to apply to join our team.”

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