Spicejet gets NCLT notice on Aircastle’s plea
Days, after a lessor filed a plea seeking insolvency proceedings against budget carrier SpiceJet Ltd, the National Company Law Tribunal (NCLT) today issued a notice to the airline and scheduled the next hearing on May 17, 2023.
SpiceJet in a statement said there's no "adverse ruling" against the homegrown airline. “In the Aircastle issue, notice was issued in the normal course. There was no adverse ruling against SpiceJet. The court has recognised the fact that parties are under settlement discussions and they can continue to pursue the same,” a company spokesperson said.
The development related to Spicejet comes at a time when the Indian aviation sector has been hit with another domestic carrier Go First Airline filing for voluntary insolvency resolution proceedings citing the failure of Pratt & Whitney engines that power its fleet.
US-based aircraft lessor Aircastle had lodged a plea against SpiceJet on April 28 over unpaid dues. SpiceJet, however, had said it had returned all the aircraft of this lessor, and that the airline is confident that it'll be able to settle the matter via court proceedings.
The Gurugram-based SpiceJet operates a fleet of Boeing 737s and Q-400s, and is one of the country's largest regional players operating multiple daily flights under UDAN or the Regional Connectivity Scheme.
The other low-cost player had recently restructured over $100 million outstanding dues to Carlyle Aviation Partner into equity shares and compulsorily convertible debentures (CCDs). Carlyle Aviation, which is an aircraft lessor, is the commercial aviation investment and servicing arm of private equity giant Carlyle's. Following the transaction, Carlyle Aviation will hold over 7.5% equity stake in the airline.
SpiceJet recently also completed the hive-off process of its cargo and logistics division ‘SpiceXpress’ into a separate entity, SpiceXpress and Logistics Pvt Ltd. The hive-off paves the way for SpiceXpress to raise funds independently.
The airline has also decided to borrow around ₹400 crores to revive 25 grounded aircraft. The funds for the revival will be drawn from the government’s Emergency Credit Line Guarantee Scheme (ECLGS) and better cash accruals. "The airline has already mobilised around INR 400 crore towards getting its grounded fleet back in the air, which will further enhance its top-line."
Last week, Go First’s lessors also approached aviation regulator DGCA (Directorate General of Civil Aviation), seeking ‘deregistration’ of 22 aircraft operated by the Nusli Wadia-owned airline. These Airbus jets include A320neo airplanes that are powered by Pratt & Whitney engines.
The step was taken after Wadia Group-owned Go Airlines reportedly asked the National Company Law Tribunal (NCLT) to urgently pass an order on its insolvency resolution plea, citing the likely repossession of aircraft by the cash-strapped carrier’s lessors. The National Company Law Tribunal had reserved its order after hearing Go First's bankruptcy plea last week.