Cash-strapped SpiceJet has taken its legal battle to the division bench of the Delhi High Court, seeking to overturn a single-bench order that mandated the grounding of three leased engines of the airline 16 August. The engines, leased from French companies Team France 01 SAS and Sunbird France 02 SAS, were ordered to be grounded due to the airline's failure to make rental payments.
Amit Sibal, senior lawyer for SpiceJet, argued the urgency of the case, emphasizing the significant public disruption that could result. “We only have a fleet of 21 aircraft. Each aircraft uses two engines, so grounding these engines will effectively lead to the grounding of two of our planes. This will cause considerable public inconvenience,” Sibal said.
Despite the plea for immediate attention, the division bench declined to expedite the hearing, scheduling it instead for 20 August.
The original order, issued on 14 August, also requires SpiceJet to return the engines within 15 days and facilitate their inspection. This ruling came after the lessors rejected an offer from SpiceJet's chairman and managing director, Ajay Singh, to pledge his shares as collateral against the airline's liabilities. The lessors, expressing doubt over the financial stability of the airline, insisted on the return of the engines and the disclosure of Singh’s assets.
SpiceJet has faced increasing legal pressures, with previous court orders demanding personal guarantees from its directors due to the airline's ongoing financial struggles.
To mitigate these challenges, SpiceJet announced plans to raise ₹3,000 crore through a qualified institutional placement (QIP) by 30 September. The airline committed to using ₹4.9 crore from this equity infusion to settle outstanding dues by the end of September. However, the lessors have shown no interest in further negotiations.
According to court filings, Team France 01 SAS and Sunbird France 02 SAS initiated legal action against SpiceJet in December 2023, citing unpaid dues exceeding $20 million. SpiceJet has managed to pay $8.36 million towards these claims, but as of 12 August, the outstanding amount remains at $9.41 million.
SpiceJet's financial woes are compounded by a series of legal challenges in the Delhi High Court and the National Company Law Tribunal (NCLT), including contempt proceedings for failing to return assets to lessor TWC Aviation Capital Ltd.
For the quarter ended 30 June, SpiceJet reported a consolidated net profit of ₹158.2 crore, a 20% decline from the ₹197.6 crore reported in the same quarter the previous year. The airline’s total income fell by 8.3% to ₹2,077.8 crore, while expenses decreased by over 7% to ₹1,919.6 crore.
As of end of June, SpiceJet’s total liabilities stood at approximately ₹11,252 crore, down from ₹11,690.7 crore as of 31 March and ₹12,420.2 crore at the end of December 2023.
Amid these financial challenges, Ajay Singh is reportedly planning to reduce his stake in the airline by over 10% to raise around ₹3,000 crore. Despite this dilution, Singh is expected to retain his position as the largest shareholder, with his holding anticipated to drop to approximately 30-35% following the fundraising by September.
