SpiceJet and Engine Lease Finance BV Reach $2 Million Interim Settlement

SpiceJet, the Indian low-cost carrier, has entered into an interim settlement with Engine Lease Finance BV, resolving a legal dispute between the two parties. As part of the agreement, Engine Lease Finance BV will withdraw a stay application, and SpiceJet will make a payment exceeding $2 million by the beginning of next year. Additionally, SpiceJet is committed to returning an aircraft engine by January 25, 2023.

The interim settlement follows legal proceedings initiated by Engine Lease Finance BV, which filed a petition with the Delhi High Court on September 27, 2023, seeking direction in the matter. During a court hearing on October 6, the court encouraged both parties to negotiate an agreement before the next hearing scheduled for October 16. Failure to reach an agreement would have led to the court issuing an injunction preventing SpiceJet from using the engine.

During the October hearing, Engine Lease Finance informed the court that SpiceJet had defaulted on nine engine lease agreements. While eight engines had been returned, one remained with the airline.

In a statement, SpiceJet announced that both parties have opted for an amicable resolution outside the courtroom. As part of the interim settlement, Engine Lease Finance retains the right to return to court if SpiceJet fails to fulfill the terms of the agreement. SpiceJet had argued for time to withdraw the remaining engine from use. The legal matter is set to be mentioned in court on February 8, 2023.

SpiceJet has been contending with legal challenges from various lessors in different courts across India. While winding-up petitions from Wilmington Trust SP Services (Dublin), Willis Lease Finance, and Aircastle are still active, the airline has successfully settled cases with other lessors, including Celestial Aviation Leasing, SPVs owned by Carlyle Aviation Partners, Nordic Aviation Capital, and real estate company Acres Buildwell. SpiceJet has expressed its intention to resolve lease disputes out of court on a case-by-case basis. Stay tuned for updates on SpiceJet’s legal proceedings and its efforts to settle disputes with lessors.