Lynx Air: Returns hurt by contractor vs. investors

Content of the article

Contractor Lynx Air says the insolvent airline is to blame for delayed refunds to customers, a holdup that also hurts the company's stakeholders.

Content of the article

Lynx, which went out of business in late February and filed for creditor protection, filed a lawsuit against Texas-based Saber Corp. The company claimed that the booking firm it hired had prevented it from compensating passengers.

Content of the article

The ultra-low-cost carrier said it plans to issue refunds directly, “without the need for customers to contact their credit card providers for refunds.”

“Unfortunately, Saber Corp. … refused to assist customers with refunds,” according to a statement from Lynx's interim chief financial officer and filed in Alberta Crown Court.

This leaves the airline with no choice but to work with the credit card processor to issue a refund for prospective travelers whose flights have been canceled.

Content of the article

Content of the article

While customers expect their purchases to be repaid, the company's investors may find it difficult to recoup their cash from Lynx.

“The refund process is expensive, so this will result in significant fees for applicants” — Lynx _ “to the detriment of its stakeholders,” the carrier said.

Saber Corp., a travel technology company with customers in more than 160 countries. did not immediately respond to a request for comment.

The deadline for customers to submit refund requests is Sept. 1, 2025, court documents state.

The closure of Calgary's Lynx comes as budget airlines that have sprung up in recent years face constant financial pressure — if they survive at all. The challenging market stems in part from industry consolidation and the downturn in the travel sector during the COVID-19 pandemic.

Content of the article

In October, WestJet closed its discount subsidiary Swoop. It also plans to spin off Sunwing Airlines by next October and integrate the low-cost carrier into its core business after acquiring the Toronto-based company last May.

Ultra-low-cost airline Flair Airlines also faced financial turbulence last year. As of November, it owed the federal government $67.2 million in unpaid taxes due to import duties on the 20 Boeing aircraft that make up its fleet.

In a lawsuit earlier this year, Lynx said it owed $124.3 million to a unit of US private equity firm Indigo Partners, led by Bill Frank, who owns a quarter of the carrier.

The new filings show Lynx has asked a judge to allow it to repay up to $94 million of that debt. Seeking to allay the concerns of other investors hoping to get their money back, Lynx said the move would “overall benefit all stakeholders” because interest would be lower.

Content of the article

When it filed for creditor protection on Feb. 22, Lynx owed $25.6 million in unpaid taxes to the federal government and $47.8 million to various trade creditors, according to court documents.

Lynx owes another $4.1 million to Toronto and Montreal airports and $4.5 million for Delta Air Lines aircraft maintenance and storage.

The company's initial investors include Indigo, Stephen Bronfman's Claridge Inc. and became Torquest Partners.

Arizona-based Indigo is best known for launching no-frills carriers such as Wizz Air in Hungary, Frontier Airlines in the US, JetSmart in Chile and Volaris in Mexico.

The lynx, which stopped flying just 22 months after its first flight, cited several reasons for its downfall.

Content of the article

A 21-month global grounding of the Boeing 737 Max 8 – Lynx's fleet of nine aircraft consisted exclusively of these planes – as COVID-19 travel restrictions and rising jet fuel prices delayed the airline's first flight by more than two years to April 2022. and made it difficult to sell tickets to the point where it could no longer pay its creditors, the ultra-low-cost carrier said in a brief filed earlier this year.

“Unlike a legacy airline or low-cost carrier, which can recoup lost revenue by increasing base fairs, ULCCs cannot deviate from a fixed base fare without abandoning the ULCC model altogether,” the filing said.

Content of the article