Four days after the Delhi High Court asked the Directorate General of Civil Aviation (DGCA) to de-register six aircraft given on lease to the no-frills carrier SpiceJet, the company said on Monday that it had reached an out-of-court settlement with one of the two lessors — Wilmington Trust SP Services (Dublin). The Irish firm had leased three Boeing A-737s to SpiceJet, and had moved court due to non-payment of rentals.
The low-cost carrier informed the BSE it had entered into a “settlement agreement” with the lessor on March 23. “Under the agreement, the lessor has agreed to withdraw court proceedings and the de-registration process of the aircraft subject to SpiceJet satisfying the terms of settlement,” the BSE announcement said. The amount paid for the out-of-court settlement was not available from company officials. However, rentals range between $2.5 lakh and $3 lakh per month.
While the Wilmington dispute seems to be more or less settled, another bench at the Delhi High Court has reserved its order on a similar matter. The petitioner is another Irish firm, AWAS Ireland, which had leased another three aircrafts to the airline. Company officials refused to comment.
Meanwhile, SpiceJet said on March 21 it has started talking to new lessors and that a new lessor has “in principle” agreed to lease three Boeing A-737 to the carrier. The company said in a statement it would like to assure its partners and customers that the situation at the airline is very different from what it was in late 2014, and that it has already received its first tranche of funding and is in the process of paying off creditors in a phased manner.
Analysts, however, said it would be critical for SpiceJet to sign up with new lessors or other carriers, else the company will face a tough situation in the coming months. In February, SpiceJet had launched its summer schedule, and announced to increase its fleet to 27 Boeing aircraft, from 17. If the new planes don’t come in soon, the fleet size will fall to 11 Boeings, and another 15 Bombardier Q400s, disrupting SpiceJet’s revival strategy.
Company officials assured that consumers will have uninterrupted service. In March 2014, it had ordered 42 Boeing aircraft, which will start getting delivered only in 2016. Meanwhile, the company had announced it will immediately procure nine more aircraft to reach a fleet of 27, and by the end of the year is aiming at a fleet of 34-35 aircrafts.
The Delhi High Court’s decision came on March 20 after Ajay Singh, the founder of SpiceJet, had bought back 58% of the beleaguered airline from Kalanithi Maran and his family. Singh’s revival plan hinges on getting away with these existing problems and commencing operations smoothly. After the change of guard, it is understood that SpiceJet has paid Rs60 crore out of the Rs 700 crore it owes to lessors. However, in an interview, COO Sanjiv Kapoor said the dues are of the order of Rs 160 crore. Singh has already pumped in Rs 500 crore of the required Rs 1,500 crore into the company, and is said to be raising more funds.