Da_Master

Discount carriers Flair Airlines and Lynx Air in merger talks, industry insiders say

Full article: https://www.thestar.com/business/dis...d7489ee49.html

Although I was not necessarily expecting this, I think most here thought one of these carriers will eventually go bust as relying solely on investor funding is not sustainable long-term and can only take you so far. If this deal were to close, having one somewhat robust ULCC instead of risking the demise of one of these airlines is a preferred option long term in order to keep AC/WJ pricing in check.

TravellingChris

A deal makes perfect sense. Canada's market is small and cannot support multiple ULCCs. A Flair/Lynx combination would likely have the best chance of surviving. Plus the deal gives the merged carrier additional aircraft for expansion (which was a big part of the logic behind the JetBlue/Spirit deal in the U.S.)

rankourabu

And just like that... Lynx is gone

czmuac

Well there goes some more competition in Canada.

qraec777

just what Canada needed, less competition!

I wish we had more competition but we are stuck with two major airlines which cost an arm and a leg and somehow both of them are equally bad (at least when flying within Canada).

qraec777

An internal employee memo from the Lynx Air management (wildly being circulated across news reports now).

meepmix

What? nooooooo... we needed way more competition here in Canada.

TravellingChris

As I predicted, Canada cannot support multiple ULCCs. The market is too small. Lynx's demise is further evidence.

The U.S. has had a few successful ULCCs but their market is massively larger than ours. Ryanair, EasyJet and Wizz have been very successful in Europe, but again their "domestic" market is many times larger than Canada's.

Hopefully Flair can survive and pick up aircraft and staff from the rubble of Lynx.

I still believe there are too many airlines trying to compete in Canada--from a financial standpoint, not from that of a consumer. Obviously anything that reduces competition is good for investors and bankers of the surviving carriers but not for the traveling public.

I do predict that eventually there will be some sort of tie-up between Porter and WestJet as well.

I maintain that part of the problem was trying to operate an ULCC model while using some of the highest-cost, most delay-prone airports in North America. Choosing to fly to YYZ instead of YHM and YVR instead of YXX, while attempting to undercut powerful rivals like AC, was poor judgment.

meepmix

I wonder in an alternate universe if Flair and Lynx were able to merge-- how successful that might have been. They could have been the Ryanair of Canada. But totally agree that there are too many players on the Canadian landscape.

Hmmm... Porter is like what WS used to be like. hmm... that's a topic for another thread.

Adam Smith

The other day, I thought the reports of a merger between F8 and Y9 was crazy since they were saying the airline that can't pay its leases would be taking over the other one. But with this news, it makes a lot more sense that F8 would have been the one doing the taking over if it had gone through.

Moonstone

Yup, We just got the following email;

Your flight has been cancelled

Hello ,

Booking Reference Code:

We’re sorry to inform you that your upcoming flight from YYZ to TPA on 04-Mar-2024 07:00 has been cancelled as Lynx Air will cease operations as of 12:01 a.m. Monday, February 26. As a result, we are unable to re-accommodate you on an alternate flight.

We ask that you contact your credit card company to request a refund. Please note: our contact centre is not able to assist with refunds.

It is with a heavy heart we leave the skies. We hope in our absence that our vision to Inspire More Canadians to Fly leaves it’s mark on our passengers.


Thankfully I was able to book us on a flight with similar times using our AirMiles with an out of pocket expense (taxes) of $50. less than our Lynx flight. We will arrive 3 minutes later than the original Lynx flight. Now hopefully our Mastercard will refund us as it appears Lynx is not.

Adam Smith

Customers have the ability to get refunds via chargebacks. The card issuers will then go after Lynx's payment processor. That payment processor will then have a very large claim against the airline. When Jetsgo went through CCAA, its payment processor (Moneris) was its largest creditor. But customers should have gotten their money back relatively quickly through their issuers.

TravellingChris

Clearly, Flair's ownership took a look at Lynx's books and decided that the assets it wants--the planes and pilots--could be acquired more painlessly by backing off and waiting.

Adam Smith

Lynx has "entered into a Letter of Intent for a transaction that will allow an orderly wind down of operations while simultaneously maximizing the value of [its] remaining assets." That may be a sale to Flair, and it's possible that the "merger" talks were always predicated on effecting the transaction via a CCAA - it's possible that whoever leaked the information about the talks either didn't know that or omitted it when they spoke to the press. Note that a term sheet of some sort was signed with Flair on January 11. It's possible that the Letter of Intent ("LOI") flows from that term sheet and the last five weeks have been spent getting the transaction together (neither mergers nor CCAA filings come together overnight). It's also possible that the term sheet led to due diligence that caused Flair to walk away and the LOI is with someone else. But I think the former is more likely.

Lynx owns no aircraft - all of its planes are leased (as are three engines). By filing for CCAA, it has defaulted on its leases. CCAA prevents creditors, including lessors, from enforcing security while the company comes up with a plan, so there won't be any sudden aircraft seizures like what Flair went through last year. But the lessors will have to be on board with whatever the deal is, so if Lynx has any sweetheart leases, it can't just sell those to someone else (not that it could necessarily do that before insolvency either). As for pilots, they're free to work anywhere. If Flair could absorb them all right away, it could just go out and hire them. As could WS and AC. It's slightly easier to bring them all in by acquiring their employer, but it only has so much value.

There may be a transaction here where Flair assumes the leases and some other obligations and Lynx's other creditors get some value out of it - Indigo has put in US$15MM (over C$20MM) so far this year, with another C$1MM of interim financing for the CCAA, and they're not dummies - but there are going to be some substantial losses for creditors here.

tobiashenry

Just called RBC and they said they cannot initate chargeback until 9 March - ask me to call back again on that day.

It's weird that I haven't heard anything from the government or from Trudeau - perhaps they are also caught off guard or just presuming Flair might buy them but in the end Flair walks away.