The private investment firm poised to take over Everton football club and which owns airlines in Canada and Australia is being chased for almost US$30m (A$44.7m) in unpaid aircraft leasing fees and damages.
777 Partners is facing legal action in the UK from three aircraft lessors over unpaid fees and damages related to four aircraft that were leased to Flair Airlines, the Canadian low-cost carrier that 777 partly owns.
The aircraft lease arrangements of the Miami-based investment firm were thrust into the spotlight in March last year when the four planes leased to Flair – three Boeing 737 Max 8s and one 737-800 – were repossessed due to outstanding fees, leading to operational issues.
The leasing contracts were terminated, with the repossession of the four aircraft on 10 March 2023 occurring after two default notices were issued to Flair on 16 and 22 February, according to particulars filed in the business and property courts of England and Wales in December.
The total of bills for rent and unpaid interest issued on 22 February 2023 was US$2.2m.
Shortly after the repossessions, Flair in March launched separate legal action in Canada against Airborne – the intermediary company managing the leases on behalf of the lessors.
Flair was seeking US$37m in damages for disruptions Airborne allegedly caused its flight operations and also reputational harm. That legal action is ongoing in the Ontario superior court of justice.
In September 2023, the lessors sent updated payment demands to 777 Partners for the leases to Flair, which they claim have been ignored. 777 Partners own 25% of Flair and is its parent company.
“Despite being repeatedly notified of their financial obligations, 777 Partners have continued to ignore calls to settle outstanding payments of almost [US]$30m,” the lessors said in a statement. “777 Partners cannot just ignore its financial and contractual obligations. This legal action is a last resort.”
The lessors who owned the four aircraft – Corvus Lights Aviation Ltd, MAM Aircraft Leasing and Columba Light Aviation Ltd – are now seeking US$28.5m from 777 Partners. That figure includes damages for breaches of contracts, lost income, interest on unpaid fees, costs to repossess the aircraft and costs to reconfigure the planes for new lease agreements.
777 Partners said the legal action by the lessors was “at best premature and at worst possibly abusing the English court system”.
“777 Partners remains supportive of Flair, the lessee, in its ongoing litigation against the egregious behavior by Airborne,” the company said on Wednesday.
As well as its airlines accessing aircraft from leasing companies, 777 Partners has an arm that leases aircraft to the carriers it owns. As a result, the repossessions in 2023 saw 777 Partners divert Max 8 aircraft that had been earmarked for its months-old Australia budget carrier, Bonza, to Flair instead.
777 Partners funded the establishment of Bonza, which launched in January 2023, and is the carrier’s sole owner. The fledgling Australian airline has struggled with aircraft shortages and was forced to cancel several routes throughout the past year.
Bonza’s fleet has grown to six 737 Max 8s, with two of the aircraft wet leased from Flair.
An unrelated lawsuit filed against 777 Partners’ former principal Timothy O’Neil-Dunne in Delaware last year included a claim that the firm financially exploited its subsidiary airlines by overcharging for the planes it leased to them.
Canadian media reported Flair was repaying a loan to 777 Partners at 18% interest.
In response to that lawsuit, 777 Partners has said the allegations were “frivolous” and that “we vehemently deny any accusations stating we are seeking to disadvantage the airlines as it would simply be illogical and counter to our own interests”.
Regarding the allegations of lease overcharging, Carly Povey, the former chief commercial officer at Bonza, told Guardian Australia in 2023: “We simply wouldn’t be here today if it weren’t for 777 Partners. We’ve been incredibly supported and it’s hard to break through in the Australian market given the duopoly [of Qantas and Virgin Australia] and they believe in what we do.”
777 Partners also invests in fintech and litigation and has stakes in a range of sports teams including Melbourne Victory, Genoa CFC, Standard Liege and Hertha Berlin.
In September, the firm signed an agreement to acquire the 94.1% of Everton owned by Farhad Moshiri. The proposed takeover is awaiting approval from the English Premier League.
This week, it was reported that 777 Partners provided Everton with a new loan of US$50m, taking its total investment in the club to more than US$180m.
Do you know more about the issues raised in this story? Contact elias.visontay@theguardian.com
