Lynx Air and Boeing Mutually Terminate 737 MAX Purchase Agreement with Court Approval in Canada

In a significant development within the aviation industry, an Alberta judge has sanctioned a mutual agreement between the now-defunct Canadian carrier Lynx Air (based in Calgary) and aerospace giant Boeing to terminate a purchase contract for the B737 MAX aircraft. This decision was made in the King’s Bench of Alberta Court in Calgary by Judge Jane Sidnell on April 2, marking the end of a deal that initially aimed to introduce forty B737-8 and B737-8-200 aircraft to Lynx Air’s fleet.

The agreement to dissolve the purchase contract, initially signed in October 2015 and later amended in 2018, also included provisions for an additional six aircraft to be obtained through leasing. Lynx Air Holdings Corporation, operating as Lynx Air, ceased its operations on February 26, 2024, and subsequently entered into creditor protection, having only received nine B737-8s on lease terms from the original order, leaving 37 aircraft undelivered.

According to court documents, including a March 25 affidavit by Michael Woodward, interim contractor CFO at Lynx Air, the airline had explored the possibility of selling its rights and interests in the MAX purchase agreement as part of an asset disposal strategy. However, it was deemed “exceedingly difficult or impossible” to sell the agreement in a manner that would maximize value for the airline. Boeing also expressed concerns about safeguarding its commercial interests, leading both parties to conclude that terminating the agreement was the most favorable course of action.

The termination agreement, dated March 21 and reviewed by ch-aviation, entails a settlement in which Boeing will compensate Lynx Air with an undisclosed amount. This arrangement was agreed upon as satisfactory by Lynx Air, the appointed Monitor, and Lynx’s senior creditor and interim lender, Indigo Northern Ventures LP.

Of the nine B737-8 aircraft delivered to Lynx Air, all were obtained through leasing arrangements with various aviation financing entities. The aircraft, identified by their respective registrations and lessors, include leases from SMBC Aviation Capital, High Ridge Aviation, Aergo Capital, AerDragon Aviation Partners, and BOC Aviation.

This termination not only reflects the challenges faced by Lynx Air in its final days but also illustrates the complexities of aircraft purchase agreements and the implications of operational cessation for airlines. The decision to mutually terminate the contract underscores the dynamic nature of the aviation sector and the necessity for flexibility and adaptability in the face of unforeseen circumstances. As Lynx Air navigates its creditor protection period, set to extend to April 15, this development marks a conclusive step in the airline’s winding-down process.