SpiceJet Granted Extended Deadline for Engine Lease Payments Amid Legal Challenges

SpiceJet, the Indian low-cost carrier based in Delhi, has been given an additional deadline until May 22 to settle a payment of USD 1.58 million to engine lessors Team France and Sunbird France. This extension comes after the airline previously disregarded a March 2024 court directive to fulfill its lease obligations within four weeks.

The decision for the extension was made by Judge Prathiba Singh of the Delhi High Court on May 3, following discussions that highlighted the judge’s willingness to offer SpiceJet “one last chance” to meet its financial commitments or face potential grounding orders.

The lessors, Sunbird France 02 SAS and Team France 01 SAS—special purpose vehicles (SPVs) managed by ST Engineering—have contended that SpiceJet has long been delinquent on its payments, accumulating arrears amounting to USD 10.84 million for the leasing of three engines. Despite a court order on March 28 mandating immediate payment of that month’s dues, SpiceJet failed to comply, leading to further judicial scrutiny.

During the court proceedings on May 1, Judge Singh considered imposing engine grounding orders, with two of the engines currently in service and one grounded, but ultimately deferred such actions pending the new payment agreement finalized by May 3.

This legal tussle is one among several that SpiceJet faces, with ongoing cases involving former investor Kalanithi Maran and KAL Airways, Delhi’s tax authorities, Genesis Aircraft Services, Cross Ocean Partners, and attempts by various entities to enforce UK High Court judgments for lease breaches.

Moreover, multiple companies including Aircastle, Celestial Aviation, Raymach Technologies, and three DAE Capital SPVs are pushing for SpiceJet’s insolvency through India’s National Company Law Tribunal.

In efforts to stabilize its financial health, SpiceJet has raised USD 127.9 million between January 1 and February 29, as part of a broader capital infusion totaling USD 271.5 million. This initiative aims to fortify the airline’s balance sheet and has enabled it to reach several settlements with its creditors.

The ongoing legal proceedings with Sunbird France and Team France are set to resume on May 27, as SpiceJet navigates through its complex financial and legal landscape.