Flair Receivership

[dialdriver]

$140 million at 18%!!

https://biv.com/article/2021/07/lawsuit ... nsion-plan

[RRJetPilot]

That’s 32,400,000 Cunukistan loonies a year In interest. How many flights a day does flair have? 10? Just spitballing. But that’s 9k in interest per flight they fly….. 47$ of each seat goes to pay back the interest of the loan.

I just don’t get the numbers. Someone smarter than me can explain?

[boeingboy]

Why would any of that surprise you?

[Lt. Daniel Kaffee]

18% of $140,000,000 works out to $25,200,000

[dialdriver]

It's called growing bankrupt.

[ALPApolicy]

18% of $140,000,000 works out to $25,200,000

USD denominated loans?

[palebird]

Well well..all of a sudden things are not looking so well..too good to be true..pie in the sky you know the standard Canadian grifter

[TheStig]

Trying to figure this out, maybe someone can fill in the blanks?

In 2018 Prescott owned 68% of Flair, they needed to pay off debt and brought in 777 Partners who loaned Flair 140M. It was a loan to payoff another loan but... don't call it a buy-in because that would push the foreign ownership beyond limits. However, now Prescott is saying 777 Partners began running the airlines growth plan and they don't agree with it and want 777 Partners to buy them out. While 777 Partners is threatening to withdrawn their investment (with interest). Messy.

[Ash Ketchum]

My non pilot friends are all praising Flair for their low prices to fly across Canada. I knew it sounded too good to be true and that the company likely wasn't turning a profit.

[rudder]

The CTA will have to keep a close eye on the goings on at FLAIR re: foreign ownership and/or control.

[GRK2]

Can any of you people show us where that 18% figure actually comes from? I see it posted here but can't seem to find any official references to it. Serious question.

[montado]

Can any of you people show us where that 18% figure actually comes from? I see it posted here but can't seem to find any official references to it. Serious question.

In the article it says the majority of the 140 is at 18 percent… so that could mean 71 million is at 18 percent and the rest is at something way more reasonable. It doesn’t make it specifically clear exactly what the terms are. So best case half of it is at 18 percent.

[atpilot]

Contrary to any false rumors, Flair is not in receivership nor is it going bankrupt!
Have a great day!

[notwhoyouthinkIam]

Contrary to any false rumors, Flair is not in receivership nor is it going bankrupt!
Have a great day!

I hope that you are correct and that this point remains correct for a good amount of time to come.

[tbaylx]

My non pilot friends are all praising Flair for their low prices to fly across Canada. I knew it sounded too good to be true and that the company likely wasn't turning a profit.

Happy to hear that people are realizing they have options other than paying ridiculous fares that they were being charged before Flair came into the market. We're looking forward to continuing to make travel affordable in many more markets as we grow

[DanWEC]

Why is the title of this thread Flair Receivership?

[FurHat]

I imagine it is because of the allegation by the plaintiff in the article:

"Meanwhile, directors of 777 Partners have allegedly threatened to call in Flair’s debt and put it into receivership if it doesn’t proceed with the leases and expansion plans, which Prescott claims are not in Flair’s best interest."

[rudder]

I imagine it is because of the allegation by the plaintiff in the article:

"Meanwhile, directors of 777 Partners have allegedly threatened to call in Flair’s debt and put it into receivership if it doesn’t proceed with the leases and expansion plans, which Prescott claims are not in Flair’s best interest."

To be clear - having a lender “call in debt” was exactly what put Skyservice in to receivership.

Third party issues are just as relevant as first and second party issues.

[CaptainHaddock]

Reasonable airline ticket prices? It cost more to fill up your truck then it does to fly. A $59 ticket is as absurd as the $1 Jetsgo tickets were. Why everybody thinks airline tickets should be so cheap is bizarre. $1.70L for gas, average Canadian house cost is $680000, $5 for a litre of milk-but heh, airline tickets should be cheap. 737 Max’s aren’t cheap, they burn 6000lbs of fuel an hour, plus all the ancillary fees the government charges. Anyway, off topic a bit, I find the cheap ticket mantra strange.

[flying4dollars]

Reasonable airline ticket prices? It cost more to fill up your truck then it does to fly. A $59 ticket is as absurd as the $1 Jetsgo tickets were. Why everybody thinks airline tickets should be so cheap is bizarre. $1.70L for gas, average Canadian house cost is $680000, $5 for a litre of milk-but heh, airline tickets should be cheap. 737 Max’s aren’t cheap, they burn 6000lbs of fuel an hour, plus all the ancillary fees the government charges. Anyway, off topic a bit, I find the cheap ticket mantra strange.

Airlines know they don't make money off just the base $59 or whatever the sector bottom line fare is for a flight. But it's not JUST $59. It's the add-ons. And in the ULCC world, there is a lot of that and it adds up.

[Inverted2]

Even if they make $100 profit on a seat and there are 160ish seats(?) that is only $16000. I don't know how any airline would make any money on that, especially with YYZ landing fees, NAV Canada fees, aircraft leasing costs etc. Fuel isn't free either. 6000lbs/hr on a 3 hour flight would be 10229 litres. I have no idea what airlines pay for a litre of jet fuel.

I don't know how they do it. I hope Flair does ok though.

[flying4dollars]

Even if they make $100 profit on a seat and there are 160ish seats(?) that is only $16000. I don't know how any airline would make any money on that, especially with YYZ landing fees, NAV Canada fees, aircraft leasing costs etc. Fuel isn't free either. 6000lbs/hr on a 3 hour flight would be 10229 litres. I have no idea what airlines pay for a litre of jet fuel.

I don't know how they do it. I hope Flair does ok though.

189 seats. I don't know what the profit margins are to be honest, but I know it's not $100 per seat. I'd say $10-20 per seat. Let's say it's $10. With 189 seats and 35 sectors on a given day, that's a total profit of $66,150 for the day or just under $2M for the month if the flights were ALWAYS full. Let's use a current average of 100 seats sold. That's $35,000 for the day or $1M for the month. Remember that's profit, after expenses. Total revenue will be higher but revenue doesn't include expenses. This number will grow as loads continue to increase, combined with additional routes, tails and sectors. Airline margins are very thin, especially for legacy carriers with legacy costs. Unless I missed something in that break down, it's not a bad start if you ask me.

[acpaleaks]

Even if they make $100 profit on a seat and there are 160ish seats(?) that is only $16000. I don't know how any airline would make any money on that, especially with YYZ landing fees, NAV Canada fees, aircraft leasing costs etc. Fuel isn't free either. 6000lbs/hr on a 3 hour flight would be 10229 litres. I have no idea what airlines pay for a litre of jet fuel.

I don't know how they do it. I hope Flair does ok though.

$100 profit is a lot. Does AC even make that much? Looking at the ticket break downs, so much of it is taxes and fees. What's left is then divvied up though leasing costs, fuel costs, crew, real estate, other employee salary etc. AC and WJ make their money on volume.

[BTD]

It’s not profit if you have to use it for expenses etc.

[boeingboy]

Even if they make $100 profit on a seat and there are 160ish seats(?) that is only $16000. I don't know how any airline would make any money on that, especially with YYZ landing fees, NAV Canada fees, aircraft leasing costs etc. Fuel isn't free either. 6000lbs/hr on a 3 hour flight would be 10229 litres. I have no idea what airlines pay for a litre of jet fuel.

I don't know how they do it. I hope Flair does ok though.

189 seats. I don't know what the profit margins are to be honest, but I know it's not $100 per seat. I'd say $10-20 per seat. Let's say it's $10. With 189 seats and 35 sectors on a given day, that's a total profit of $66,150 for the day or just under $2M for the month if the flights were ALWAYS full. Let's use a current average of 100 seats sold. That's $35,000 for the day or $1M for the month. Remember that's profit, after expenses. Total revenue will be higher but revenue doesn't include expenses. This number will grow as loads continue to increase, combined with additional routes, tails and sectors. Airline margins are very thin, especially for legacy carriers with legacy costs. Unless I missed something in that break down, it's not a bad start if you ask me.

LOL! OK......if your grade 6 math was reality - there wouldn't be an airline anywhere that couldn't turn a healthy profit!

Yea - you missed a lot. For one - you do know that you cant use a fixed scale for cost? By your math - you simply could sell 10 seats and still make a profit of $10,500 for the month! Everyone here knows you cant make any money by only selling 10 seats on a 737.

The average cost of a 737 Max is in the neighborhood of $3700 USD per block hour. 35 sectors divided by 8 aircraft is (rounded off) 4 sectors. Lets be generous and average 5 block hours per sector. $3700 (per block hour) x 20 (block hours) x 30 (days) = $2,200,000 USD per month just for the aircraft. And you have 8 aircraft.

Lets break that down even more......4 (sectors a day) x 100 (your stated average seat sell) x 30 = 12,000 seats per month meaning that (after conversion) those 100 seats would each have to sell for $235.00 cad just for the aircraft to break even. Now add in the government taxes, Nav Canada fees, airport fees, contract fees, operating expenses for the company, interest on loans, plus a little profit and you need to charge about $500 per seat (based on 100 seats)

There are a lot of variables in there that could easily drive that cost up. Usually airlines need about a 60% load factor to break even (113 seats = about $470 per seat), and I suspect that Flairs block hour cost is a little higher than stated. I don't think your making $1 million profit a month.