SpiceJet to resolve issues with lessors, avoid grounding

Indian carrier SpiceJet Ltd today said it expects to resolve settlement disputes with its lessors shortly, and that there will be no grounding of aircraft or disruption in operations.

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

The carrier was on the verge of collapsing in December after running out of cash to pay its creditors, before co-founder Ajay Singh stepped in with a rescue package to keep the airline flying.

SpiceJet has reached an in-principle understanding with one of the two lessors and is in advanced discussions with the other, the company said in a statement, adding that the situation of the airline is "very different" from what it was in late 2014.

The company also expects to add 8-9 Boeing aircraft to its fleet starting April and plans to take its Boeing fleet up to 34-35 aircraft by the end of 2015, the statement added.

The high court had on Thursday ordered the Directorate General of Civil Aviation to deregister six of SpiceJet's Boeing 737 planes on the termination of lease agreements by the leasing companies, AWAS Ireland Ltd and Wilmington Trust SP Services (Dublin) Ltd.

Justice Rajiv Shakdher had directed the DGCA to "forthwith" deregister the aircraft saying once the creditors fulfilled the conditions prescribed in Aircraft Rules, the aviation regulator was "mandatorily required to cancel registration".

The airline said today these cases originated when it was in financial crisis in December last year, before change of ownership and infusion of fresh funding.

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 airline said that it was exploring all legal remedies to safeguard its interests and to maintain continuity of operations.

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