SpiceJet Ordered to Pay USD 445,000 to Engine Lessors by Delhi High Court

The Delhi High Court has ruled against SpiceJet, the Indian low-cost carrier, mandating the airline to pay INR 37 million (approximately USD 445,000) to two engine lessors, Team France 01 SS and Sunbird France 02 SS. The decision, issued by Justice Rekha Palli in a hearing on December 19, 2023, is a significant legal victory for the lessors.

These special purpose vehicles (SPVs) had been seeking redress for unpaid dues amounting to USD 12.9 million, with SpiceJet being in arrears for two years. The engine leases were terminated due to these breaches. Additionally, the lessors’ counsel requested a restraining order to prohibit SpiceJet from using any remaining engines from the leases.

Justice Palli directed SpiceJet to fulfill the payment in a series of installments between December 21, 2023, and January 3, 2024. The case is set for a follow-up hearing on January 4. During the proceedings, Justice Palli indicated a likelihood of granting the restraining order in the next hearing, noting SpiceJet’s acknowledgment of the debt. She emphasized the airline’s responsibility to either pay for the engines or return them.

SpiceJet, in response, stated that it is actively clearing its dues and is engaged in a capital-raising effort, with a portion of the funds earmarked for settling litigation. The airline is currently facing legal actions from various engine and airframe lessors for lease breaches, with some seeking insolvency proceedings and others pursuing different legal remedies.

In a separate development, Indian media reported potential investment from Mumbai-based businessman Harihara Mahapatra and his wife, Preeti. The couple, through Mahapatra Universal Limited, is considering investing INR 11 billion rupees (USD 132.4 million) for a 19% stake in SpiceJet. This investment is part of a broader capital-raising initiative by SpiceJet, which includes issuing convertible bonds and shares to multiple investors.

Moreover, SpiceJet has expressed interest in acquiring its insolvent competitor, Go First, as disclosed in a filing to the Bombay Stock Exchange. The airline believes that merging with Go First would create a strong and viable aviation entity. SpiceJet’s board has approved a plan to raise approximately USD 270 million to bolster its financial position and fund growth strategies.

This series of events highlights the ongoing financial and operational challenges faced by SpiceJet, as it navigates through legal hurdles and explores strategic avenues for stability and growth in the competitive aviation sector.