Two Lessors Secure $15 Million Judgment Against SpiceJet in London High Court

Two Lessors Secure $15 Million Judgment Against SpiceJet in London High Court

The London High Court has ruled against the Indian low-cost carrier SpiceJet and ordered it to pay a combined sum of $15 million to two lessors.

The lessors included GASL Ireland Leasing A-1 and VS MSN 36118 CAV. Judgments in both cases passed are related to SpiceJet committing default in payment rent dues to the lessors.

GASL’s dispute with SpiceJet was about non-payment of rent for an aircraft the latter leased along with unfulfilled redelivery conditions. The carrier took one Boeing 737-800 from the Irish lessor in May 2017 and failed to pay rent after a point.

GASL asked SpiceJet to return the airframe in March 2021 at Shannon Airport in Ireland, but the airline only made the plane available in August later that year, and that too in Bangalore, India.

On 18 February, 2022, GASL was successful in securing a summary judgment for an outstanding rent of over $5.3 million. SpiceJet failed to meet elaborate redelivery conditions starting with the airframe not being returned to Ireland. The lessor sent the returned 737 to an experienced aircraft maintenance engineer by the name of Peter Bull for an inspection in Lithuania.

The Court awarded over $8.49 million to GASL in its judgment, after considering Mr. Bull’s expert opinion into consideration and accepting the failure to comply with various other redelivery conditions by SpiceJet.

Before the order was passed, the LCC attempted to get the case adjourned after the law firm representing it pulled out. However, the Court showed no sympathy and pointed out how the carrier had made no efforts to find alternate representation and tried to stall proceedings on previous occasions as well.

VS MSN dispute was related to Boeing 737-700 that SpiceJet leased for 96 months in April 2018. As the pandemic wreaked havoc on the global aviation industry, SpiceJet struggled financially and defaulted on rent payments in November 2020.

Thereafter, both parties then agreed to defer rent payments of $1,657,376.

The cash-strapped airline continued to miss payments and by early September 2022, the airline had racked up an outstanding amount of $4.1 million in rent and maintenance dues.

After failing to acknowledge service initially, SpiceJet disputed a clause in the lease agreement that said in the event of default, the lessor was entitled to receive full payment of rent until the previously agreed upon lease term ends. The excess sum paid would be returned to the airline when the plane was redelivered.

It was on the basis of this clause, SpiceJet argued that the said clause only applied to future rentals.

While the presiding judge accepted ambiguity in the wording, he ultimately ruled in favor of the lessor and awarded a summary judgment of $5.89 million. As a result, a summary judgment was entered against the airline.