Engine lessor and SpiceJet arrive at $2 million interim settlement: Report

The Delhi High Court (HC) was notified on Monday that an interim settlement had been reached between Engine Lease Finance BV and low-cost airline SpiceJet, reported Moneycontrol.

The engine lessor has agreed not to pursue the stay application against SpiceJet for the time being, said the report.

According to the terms of the settlement, SpiceJet must pay over $2 million to Engine Lease Finance by January. SpiceJet has also committed to returning the engine, which is the bone of contention by January 25. However, the Engine lessor will not revoke the termination and is free to take SpiceJet to court if these undertakings are not met.

On October 5, the Delhi High Court granted SpiceJet time till October 16 to settle the matter and noted that it would restrain the airline from using the engine if no settlement is reached.

On September 27, Engine Lease Finance informed the court that it had terminated its lease with SpiceJet and that the airline had returned eight of its nine engines. According to the agreement, the airline cannot use the engine once the lease is terminated. The lessor sought the court's order to restrain SpiceJet.

The judge issued a notice to SpiceJet, and the case is expected to come up for a hearing on October 6. Engine Lease Finance Corporation was represented by Senior advocate Rajshekar Rao and lawyer Anandh Venkatramani, who were briefed by Tuli & Co's partner Saket Satapathy.

Engine Lease Finance is also a lessor for the grounded airline Go First. It is fighting Go First at the National Company Law Tribunal (NCLT) to be exempted from the insolvency process, as it terminated the leases before the order for the moratorium was passed.

SpiceJet and lessors

Four aircraft lessors have filed five insolvency petitions against SpiceJet in 2023 for non-payment of dues. Aircastle Ireland Ltd, Willis Lease Corporation, Wilmington and Celestial filed petitions, asking NCLT to admit SpiceJet to insolvency so they may recover their dues.

While the NCLT has only issued a notice in Aircastle's first plea, it has been pressing the airline to reach an agreement with the lessors. In August, SpiceJet allotted over 48 million shares to nine aircraft lessors to clear outstanding dues worth 2.31 billion rupees (nearly $28 million), as the troubled airline looks to return to full operations.

The carrier's shareholders passed a number of resolutions, including a Rs 25 billion fundraising and a preferential issue of shares to lessors to clear outstanding dues.