Regulators to probe Flair's new ownership structure

Move comes after long-time backer 777 Partners cut its stake in airline

- JOSH RUBIN

A Flair Airlines spokesperson said the company is "confident" its new financial structure complies with federal foreign ownership regulations. Total foreign ownership of a Canadian airline can be no higher than 49 per cent, and no single foreign organization or company can own more than 25 per cent of an airline.

The Canadian Transportation Agency says it will investigate Flair Airlines' new ownership structure to see if it meets Canadian ownership rules after a long-time backer cut its stake in the discount carrier.

In an email, agency spokesperson Vincent Turgeon said the CTA was looking into the May 1 announcement by Flair that long-time backer 777 Partners was transferring part of its stake in the airline to an "affiliate" of one of Flair's lenders.

Industry sources say the unidentified Flair lender is affiliated with AIP Capital.

A report in Australia said U.S. insurance conglomerate A-CAP and its affiliates including AIP - currently hold roughly $500 million of Flair debt.

"We will be reviewing all available information to assess continued compliance with the Canadian ownership and control requirement," said Turgeon. "The Agency will take action if the situation warrants it, to ensure that Flair, as all carriers, uphold its licensing obligations." Among the potential sanctions, if Flair's structure doesn't follow the rules, is revoking the airline's Air Operator Certificate, without which it wouldn't be allowed to fly.