Aircastle withdraws insolvency case against SpiceJet after $5.6 million settlement

New Delhi: In a relief for SpiceJet, Ireland-based aircraft lessor Aircastle has withdrawn its insolvency case against the budget airline after reaching a $5.6 million settlement.

Both parties informed the National Company Law Tribunal (NCLT) in Delhi about the settlement on Wednesday, after which the tribunal approved the withdrawal of the case. 

This marks another instance of the airline settling its disputes with creditors after raising ₹3,000 crore through a qualified institutional placement (QIP).

In October, the airline had announced the resolution of a $23.39 million dispute with Aircastle (Ireland) Designated Activity Co. and Wilmington Trust SP Services (Dublin) Ltd. The matter was settled for $5 million, along with an agreement regarding the treatment of certain aircraft engines.

Aircastle was among the first lessors to file an insolvency plea against SpiceJet in 2023 for defaulted rental dues, as the airline faced mounting insolvency claims from lessors and vendors in Delhi’s insolvency court. 

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SpiceJet's disputes with lessors and vendors

On 9 October, the airline resolved a $131.85 million claim with Horizon Aviation 1 Ltd., Horizon II Aviation 3 Ltd., and Horizon III Aviation 2 Ltd., managed by Babcock & Brown Aircraft Management, for $22.5 million. 

On 24 September, SpiceJet settled a claim with Engine Lease Finance Corp., reducing its dues from an initial $16.7 million. 

SpiceJet settled with Celestial Aviation, Alterna Aircraft, and Raymach Technologies. Despite the settlements, SpiceJet continues to face insolvency claims. 

Last week, the NCLT issued notices to the airline over pleas filed by lessors Sabarmati Aviation and JetAir 17. On 24 October, another insolvency plea was filed by Falgu Aviation Leasing Ltd over a default of $8.1 million ( ₹68 crore).

However, it’s worth noting that none of these claims have resulted in any insolvency proceedings against SpiceJet to date. Many have been withdrawn after settlements, some dismissed, and others are still pending.

Additionally, SpiceJet is also set to receive ₹736 crore from a previous funding round, further bolstering its financial stability and growth prospects.

This new capital is vital for SpiceJet to address the financial challenges and settle obligations with various creditors, particularly lessors involved in ongoing litigations in the NCLT, Delhi high court, and the Supreme Court regarding unpaid dues.

Recent court orders have mandated the grounding of leased engines and aircraft due to these unpaid dues, exacerbating the airline’s difficulties.

According to media reports, SpiceJet’s CMD Ajay Singh stated that the airline aims to expand its fleet to 100 aircraft by 2026. 

Singh indicated that SpiceJet plans to quickly return its 36 grounded aircraft to service, which are currently out of operation due to a lack of spare parts. By March 2025, the airline expects to have a fleet of 40 aircraft, equivalent to that of Akasa Air, with plans to add another 40 thereafter. 

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