SpiceJet Settles $5.6 Million Dispute with Aircastle, Court Approves Withdrawal of Insolvency Case
SpiceJet has secured a significant relief as Ireland-based aircraft lessor, Aircastle, has withdrawn its insolvency case against the airline after both parties reached a settlement worth $5.6 million. This development was confirmed by both parties during a hearing at the National Company Law Tribunal (NCLT) in Delhi on Wednesday, where the tribunal officially approved the withdrawal of the case.
SpiceJet's Ongoing Dispute Settlements
This settlement with Aircastle adds to a series of similar resolutions SpiceJet has reached with its creditors. In October, SpiceJet had announced a settlement of a $23.39 million dispute with Aircastle (Ireland) and Wilmington Trust SP Services for $5 million, which also included agreements related to certain aircraft engines.
Previously, in October, the airline had also resolved a $131.85 million claim with Horizon Aviation and managed entities for $22.5 million. Additionally, SpiceJet settled with Engine Lease Finance Corp. and other lessors like Celestial Aviation, Alterna Aircraft, and Raymach Technologies. These settlements have played a key role in helping SpiceJet avoid prolonged insolvency proceedings, although disputes continue.
SpiceJet’s Ongoing Financial Struggles
Despite these settlements, SpiceJet is still facing significant challenges. The airline continues to deal with unresolved insolvency claims from several lessors and vendors. Last week, the NCLT served notices to SpiceJet regarding claims made by lessors Sabarmati Aviation and JetAir 17. Additionally, Falgu Aviation Leasing Ltd. filed another insolvency petition over an $8.1 million default.
However, it’s important to note that none of these claims have yet resulted in formal insolvency proceedings against SpiceJet, with many of the cases being withdrawn or dismissed after settlements. Some, however, remain pending.
Financial Strengthening Through New Funding
In a bid to address these financial pressures, SpiceJet is set to receive Rs.736 crore from a previous funding round. This new capital will provide much-needed support to the airline as it continues to settle its obligations, particularly with creditors involved in ongoing litigation across various courts, including the NCLT, Delhi High Court, and the Supreme Court. SpiceJet has faced orders that resulted in the grounding of certain leased engines and aircraft, which has worsened the airline's financial difficulties.
Future Expansion Plans
Despite the financial challenges, SpiceJet remains optimistic about its future. Chairman and Managing Director Ajay Singh has stated that the airline aims to expand its fleet to 100 aircraft by 2026. The airline is also focusing on returning its 36 grounded aircraft to service. These planes have been out of operation due to a shortage of spare parts. SpiceJet plans to have 40 aircraft in its fleet by March 2025, which would place it on par with Akasa Air. The airline is also planning to add another 40 aircraft shortly after.
This new growth strategy, combined with recent financial support, provides SpiceJet with the potential to overcome its current challenges and strengthen its position in the competitive airline market.
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SUMMARY
SpiceJet has reached a $5.6 million settlement with Aircastle, leading to the withdrawal of an insolvency case against the airline. This marks another in a series of settlements by SpiceJet to resolve disputes with creditors after raising Rs. 3,000 crore through a funding round. While the airline has resolved several claims with lessors, including Aircastle and Horizon Aviation, it still faces ongoing insolvency claims, including notices from Sabarmati Aviation and JetAir 17, and a new insolvency plea from Falgu Aviation Leasing Ltd. Despite these challenges, SpiceJet is set to receive Rs 736 crore in additional funding, which will help address its financial issues and ongoing litigation. The airline also plans to expand its fleet to 100 aircraft by 2026, including returning 36 grounded planes to service.
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