SpiceJet (SG, Delhi International) is reportedly working towards settling a lawsuit filed by Irish lessor Goshawk and its trustee Wilmington Trust SP Services (Dublin), a subsidiary of the American holdco M&T Bank Corporation, and is also edging closer to an out-of-court settlement with De Havilland Aircraft of Canada over a separate court case.
Goshawk and Wilmington had allegedly tried to block the planned spin-off of the budget carrier's cargo and logistics business, SpiceXpress and Logistics Private Ltd, to a separate company, a source close to the matter told the Indian financial daily Mint. The agreement paves the way for the airline to complete the transfer by January 2022.
Goshawk leases three aircraft to SpiceJet, according to the ch-aviation fleets module, namely two B737-8s and one B737-800. But when the carrier announced the spin-off, the lessor approached the High Court of Delhi to halt the process until about USD16.2 million in outstanding leases had been paid, the sources explained. SpiceJet and Goshawk had already been embroiled in a case at the High Court of Justice in London over debts owed.
The Delhi court issued an interim order in September restraining the debtor from "transferring or alienating its assets to the tune of the decretal amount" and the court was to have heard the case again on November 29. The SpiceXpress "slump sale" would generate INR25.56 billion rupees (USD340 million) for the debt-encumbered carrier which, it claimed, would "wipe out a substantial portion" of its negative net worth.
The development comes after the airline revealed earlier this month that it had settled with Boeing over outstanding claims related to the grounding of its B737 MAX fleet. According to unconfirmed sources cited by the Times of India on November 29, SpiceJet will be given two B777-200ERs as part of the compensation for the thirteen B737-8s it has so far taken delivery of and were grounded for around 19 months. The airline has begun the process of hiring pilots for these two widebodies, the airline's first, and will use them for long-haul passenger or cargo flights depending on the Covid situation.
A SpiceJet spokesperson declined to comment on the court case but stressed that "there is no stay from the court on the transfer of logistics business to the subsidiary. The plan for capital infusion in the logistics arm is progressing." Goshawk said it "wishes to confirm that no settlement has been reached with SpiceJet in this matter, which continues to be the subject of litigation."
Meanwhile, talks between SpiceJet and De Havilland over the non-payment of dues for the delivery of fourteen DHC-8-Q400s are at "advanced stages" and are likely to be resolved in the coming weeks, "people in the know" told the Business Line newspaper on November 30.
De Havilland had asked Delhi High Court to force SpiceJet to pay USD42.9 million in damages awarded - and then upheld earlier this year at the High Court of Justice in London - over a 2017 purchase agreement for twenty-five of the Dash 8 turboprops, claiming the airline paid for and took delivery only five of them and halted pre-delivery payments for most of the remainder.
"Both companies have agreed to settle out of court. It will be a commercial agreement, and it is a ‘win-win’ for both companies," a source said without divulging the contours of the deal. Another elaborated that "SpiceJet may induct fewer aircraft for now and maintain a long-term relationship with the manufacturer."
SpiceJet and De Havilland did not immediately respond to ch-aviation’s requests for comment, while Goshawk commented that it "wishes to confirm that no settlement has been reached with SpiceJet in this matter, which continues to be the subject of litigation."
