Spicejet, De Havilland mull over out-of-court settlement for non-payment of dues

Forum Gandhi | | Updated on: Nov 30, 2021
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The case between Spicejet and De Havilland involves the delivery of 14 Dash 8-400 turboprops that Spicejet had ordered

SpiceJet and Canadian aircraft manufacturer De Havilland are mulling an out-of-court settlement for the non-payment of dues for the delivery of 14 Dash 8-400 turboprops the former had ordered.

Both companies are set to get into a commercial agreement. The conversations are in “advanced stages” according to sources and is likely to be implemented by next month.

Settling case out-of-court

In August, De Havilland dragged low-cost-carrier to Delhi High court to implement the $42.9 million claim decree granted by a UK court.

According to people in the know, SpiceJet approached De Havilland to consider an out-of-court settlement. While De Havilland was insisting on making SpiceJet cough up $42.9 million earlier, it has now reconsidered its position in the matter.

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“Both the companies have agreed to settle it out of court. It will be a commercial agreement. It is a ‘win-win’ for both companies,” the person said, without divulging the contours of the deal.

However, another person said that “SpiceJet may induct fewer aircraft for now and maintain a long-term relationship with the aircraft manufacturer,” said another person.

Both SpiceJet and De Havilland did not respond to BusinessLines query.

Non-payment of pre-delivery dues

In 2017, Spicejet signed a purchase agreement for 25 Q-400 aircraft. It took delivery of five aircraft, but failed to make pre-delivery payments for fifteen aircraft in the order. It also did not take delivery of three of those planes. Later, the Canadian aircraft manufacturer suspended the contract.

The matter came to light when SpiceJet did not cough up pre-delivery dues for 14 of the said aircraft. In February 2020, De Havilland sued the low cost carrier for the same in a UK High Court. Earlier this year, the UK court upheld De Havilland’s claims and said that it was entitled to recover $42.9 million in liquidated damages from the airline.

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De Havilland isn’t the only company SpiceJet is negotiating with. Over a fortnight ago, the Gurgaon-based airline said that it had entered into an agreement with Boeing to settle outstanding claims related to the grounding of 737 Max aircraft and its return to service. SpiceJet’s fleet of 13 Max aircraft has not operated any commercial flight since March 2019 when the plane was grounded worldwide after two fatal accidents.

Published on November 30, 2021

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