Flair in hot water with the CRA

[fish4life]

That’s exactly it, the CRA can’t seize one aircraft worth over 67 million and be like ok we’re good when flair doesn’t own the aircraft. If flair outright owned the 737 with no loan / lease in it then that would work but it’s not the case.
The CRA wants their money and they don’t want to shut a business down by seizing everything they own to maybe get it they’d rather the business survive and get paid each month until those payments stop and then you’ll see a bunch of EFB’s end up on the government auction website.

[Maurice]

But can they stop Flair from bringing in anymore aircraft until they're up to date? Already said they won't be taking a tail this year and blamed it on Boeing timing, but maybe CRA has something to do with it too.

Those quick captain upgrades must have dried up in a hurry, well unless there are actually captains jumping ship for greener pastures.

[cdnavater]

But can they stop Flair from bringing in anymore aircraft until they're up to date? Already said they won't be taking a tail this year and blamed it on Boeing timing, but maybe CRA has something to do with it too.

Those quick captain upgrades must have dried up in a hurry, well unless there are actually captains jumping ship for greener pastures.

That’s actually a good point, I wonder if the “agreement” includes not increasing the amount owing any further, ie importing more aircraft, tax in arrears elsewhere. That would be logical, you owe us and will pay this as per our agreement, if your bill increases, the agreement is null and void.
The only way to do it would be cash on the dash

[Realitychex]

Lynx owed the CRA about 38.2% of what Flair owes the CRA.

Note Lynx’s repayment terms below, negotiated in Nov 2023, the same time Flair negotiated its repayment deal.

It’s one thing to be current with the roughly $1.3m the CRA wanted paid from Dec through the end of March, averaging $327k a month.

But prorate Lynx’s repayment schedule for taxes owed on 9 tails to what Flair owes for at least 18 tails and Flair / its existing or potential new investors will be cutting the CRA a cheque for $1,842,105 every month starting April for about 4 years, with the 10% per annum interest included. It’ll end up being close to $90m if you do the math.

That’s serious money, and the last thing existing or any potential investors want to do is throw that sort of money at Flair to discover none of it can be used for working capital. It goes to the CRA.

And after seeing how quickly Lynx blew through cash with 9 tails, with as sophisticated an airline investor as it gets in Indigo, how much appetite will there be for others to throw capital at Flair or any other startup over the next 3-5 years?

After SG melted down in 2005, it took about 10 years for investors to come back the table.

From Lynx’s CCAA filing:

Lynx Opco is in arrears with the CRA in the amount of CAD$25,578,279 (the
"Outstanding Balance") for debt owing to the Canada Border Services Agency in respect of GST incurred on importation of aircraft into Canada. As such, the CRA and Lynx Opco have entered into a payment arrangement dated November 17, 2023 (the "CRA Arrangement Agreement").
Pursuant to the CRA Arrangement Agreement, as of October 2023, Lynx Opco is required pay a total of CAD$500,000 towards the Outstanding Balance according to the following schedule:
CAD$100,000 on December 1, 2023, CAD$100,000 on January 2, 2024, CAD$100,000 on February 1, 2024, and CAD$200,000 on March 1, 2024. Commencing April 1, 2024, Lynx Opco must make monthly payments on the first of each month, in a minimum amount of CAD$700,000
towards the Outstanding Balance, until the arrears are retired.

[airway]

Lynx Opco is in arrears with the CRA in the amount of CAD$25,578,279 (the
"Outstanding Balance") for debt owing to the Canada Border Services Agency in respect of GST incurred on importation of aircraft into Canada. As such, the CRA and Lynx Opco have entered into a payment arrangement dated November 17, 2023 (the "CRA Arrangement Agreement").

So Lynx’s debt to the CRA is for unpaid GST. There was some question weather Flair’s debt to the CRA was for unpaid GST or some other type of tax or duty.

[cdnavater]

Lynx Opco is in arrears with the CRA in the amount of CAD$25,578,279 (the
"Outstanding Balance") for debt owing to the Canada Border Services Agency in respect of GST incurred on importation of aircraft into Canada. As such, the CRA and Lynx Opco have entered into a payment arrangement dated November 17, 2023 (the "CRA Arrangement Agreement").

So Lynx’s debt to the CRA is for unpaid GST. There was some question weather Flair’s debt to the CRA was for unpaid GST or some other type of tax or duty.

That was speculation, I do believe the company has said the tax owing was for the imported aircraft.
Edit; if you go back and read the original post that started this thread, it’s in the first 10secs of reading

[Realitychex]

It's for the importation of aircraft.

Regardless, taxes are owed on those aircraft and if they aren't paid, things will start disappearing.

One learns very quickly that owing back taxes in both Canada and the US quickly becomes a very expensive proposition.