SpiceJet settles dispute with lessor, seeks Rs 200-cr loan to clear dues
SpiceJet has decided to end its dispute with aircraft lessor Goshawk Aviation. It is also seeking a Rs 200-crore loan under the Emergency Credit Line Guarantee Scheme (ECLGS) to clear pending dues and induct new planes.
The airline on Tuesday announced that it had entered into a settlement with the lessor and its affiliates over a payment dispute related to three Boeing 737 aircraft. Goshawk Aviation had sued SpiceJet in a UK court for $ 16 million following default in lease payments. The court recognised default but ordered mediation in its order last May.
In a statement, SpiceJet said both sides have agreed to settle all disputes and withdraw legal proceedings before courts in UK and Delhi. The settlement will allow entry into service of two Boeing 737 MAX aircraft, which have been grounded due to the dispute. SpiceJet has 13 MAX aircraft in its fleet; it is operating only 11 of them.
Separately, the airline is planning to induct seven Boeing 737 MAXs this year. Discussions are underway with lessors to clear pending dues and the airline is hoping inductions shall begin in October-November. The new aircraft will be for replacements and expansion. It will also result in fuel savings and bring income from sale and leaseback of aircraft.
The Directorate General of Civil Aviation last month ordered SpiceJet to operate only 50 per cent of its scheduled flights for eight weeks beginning July 27.
The airline has also applied for a Rs 200-crore loan under the ECLGS and will use the proceeds to pay statutory dues, lessors, and others.
Earlier in March, the government extended the scheme of the ECLGS by a year and raised the per borrower cap for the civil aviation sector to Rs 400 crore. In 2021, SpiceJet and Go First borrowed Rs 128 crore and Rs 25.65 crore, respectively, under the scheme.
SpiceJet did not respond to an email.
“Even as the pandemic is behind us, airlines in India are struggling. Everyone is incurring losses and capital is being pumped to fund losses,” an industry executive remarked.
SpiceJet has been unsuccessful in raising funds from external investors but two weeks ago, it said discussions are on with various investors to secure sustainable financing.