India SpiceJet secures lessor in $ 25.6 million deal
SpiceJet (SG, Delhi Int’l) and Irish lessor Goshawk were urged to intervene by a UK court as the judge admitted the airline was at fault, but said forcing the low-cost carrier struggling to pay could lead to insolvency, documents from the High Court of Justice in London show.
The subsidiaries of Goshawk Sabarmati Aviation Leasing Limited and Falgu Aviation Leasing Limited, formerly known as Sky Aircraft Cassia Two and Sky Aircraft Cassia One, respectively, sued SpiceJet with Wilmington Trust SP Services (Dublin), a subsidiary of Wilmington Trust Corporation. – acting as trustee for BOC Aviation (Ireland) Limited – for an amount exceeding US $ 25.6 million of unpaid leases.
The leases concern the B737-800 VT-SZJ (msn 41397) under a contract signed in August 2013 and two B737-8, VT-MXF (msn 64507) and VT-MXJ (msn 64509), signed in June 2018. The airline admitted that it was unable to pay the outstanding principal amounts, which court documents show to be $ 2,464,600, $ 11,663,457 and $ 11,534,534.
In summary judgment, without resorting to a full trial, Julia Dias QC ruled that Goshawk was correct in claiming the amounts, but refused to take action against SpiceJet.
“It would be appropriate to grant a stay of execution for these requests,” she said.
SpiceJet’s ability to pay “depended entirely on its ability to operate the aircraft and through no fault of its own the totally unpredictable ‘double whammy’ of Covid and MAX 8 tragedies now makes it unable to fly MSN 64507 and MSN 64509 to all and able to operate MSN 41397 only to a very limited and unprofitable extent, ”added the judge.
“The execution of all judgments should be suspended for a period to allow the parties to undertake mediation or other form of alternative dispute resolution and, in the case of [Wilmington Trust’s] claim, at least until the trial of the remaining claims and cross claims between the parties ”, concludes the judgment.
Airlines executives told India’s Business Standard newspaper the move was a relief for carriers like SpiceJet, which have been unable to track lease payments due to the impact of Covid-19 on the economy. travel request. But donors called it “disappointing”.
“Normally, leases are covered by the ‘hell or high water’ clause, which implies that airlines should continue to pay rents regardless of any issues like financial losses. This judgment casts doubt on this protection and gives the airlines a break, ”an anonymous hiring manager told the newspaper.
Goshawk was not immediately available for comment.
Last month, it was reported that Wilmington Trust Corporation and two anonymous airlines were suing SpiceJet in the UK High Court for around $ 16.2 million, which they said was owed under three leases . As previously reported, SpiceJet faces several lawsuits amid ongoing financial losses, with its auditor last year casting doubt on its status as a going concern in the carrier’s latest annual report.