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Aircastle, an Ireland-based lessor to SpiceJet Ltd, has informed a tribunal that settlement talks regarding unpaid dues were inconclusive.
Aircastle had previously sought to initiate bankruptcy proceedings against the airline for non-payment of lease rentals and other dues.
The airline owes Aircastle approximately ₹50 crore ($6 million). SpiceJet has requested time from the tribunal to respond to the bankruptcy plea.
Local challenges
The airline has been facing financial challenges due to consecutive quarterly losses and increased competition in the local market.
In an effort to raise funds, it had announced the revival of 25 of its grounded fleet using its own capital and a $50-million line of credit from a government scheme.
The recent bankruptcy proceedings of rival airline, Go First, have created concerns among international lessors who are now anticipating a lengthy legal battle to reclaim their planes from the country.
Consequently, SpiceJet’s lessors, including SMBC Aviation, have submitted several requests to India’s aviation regulator to deregister their planes and remove them from the country due to pending dues.
Time till May 25
SpiceJet stated that it has no plans to follow a similar path and file for insolvency, expressing gratitude to its lessors for their continued support.
The National Company Law Tribunal (NCLT) has granted SpiceJet time till May 25 to respond to Aircastle’s petition. Aircastle confirmed that previous settlement talks with SpiceJet were unsuccessful, and the airline’s offer was deemed inadequate.
Despite the challenges in the Indian aviation industry, SpiceJet affirms its intention to avoid insolvency and focuses on its business operations.
Nevertheless, on May 12, aircraft lessor GY Aviation Lease approached the Directorate General of Civil Aviation (DGCA) to deregister two more Boeing 737-8 aircraft belonging to SpiceJet.
Several other aircraft of SpiceJet are already grounded due to various reasons, with multiple lessors seeking deregistration of their respective planes.
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