SpiceJet reaches settlement with one of its lessors

Wilmington Trust has agreed to withdraw the process of deregistering its aircraft

SpiceJet Ltd on Monday said that one of its aircraft lessors had agreed to end court proceedings that threatened to ground some of the budget carrier's aircraft, after the two sides reached a settlement.

SpiceJet said Wilmington Trust SP Services (Dublin) Ltd had agreed to withdraw the process of deregistering the aircraft, subject to SpiceJet satisfying the terms of the settlement, according to a company statement to the stock exchange on Monday.

The Indian carrier, which was on the verge of collapse in December after running out of cash to pay its creditors, said on Friday it expected to resolve the disputes with two of its lessors.

The Delhi High Court had on Thursday ordered the aviation regulator to de-register six SpiceJet aircraft belonging to two lessors.

An airline cannot operate an aircraft once it is deregistered by aviation regulator DGCA.

The court had said the petitioner companies, AWAS Ireland Ltd and Wilmington Trust SP Services (Dublin) Ltd, had fulfilled the conditions stipulated in the Rules, and therefore, the DGCA had no discretion in the matter.

The court also said it "cannot interdict the process of deregistration on the nebulous ground of equity as it would be contrary to the provisions of the Cape Town Convention and Protocol, to which, India is a party."

The Cape Town Convention provides better protection to aircraft lessors and banks.