Delhi HC orders SpiceJet to ground three engines by 16 August

New Delhi: The Delhi high court on Wednesday ordered cash-strapped airline SpiceJet to ground three engines leased from two French lessors due to default on rental lease payments. 

The court directed the budget airline to ground these engines by 16 August, return them to the two lessors–Team France 01 SAS and Sunbird France 02 SAS– within 15 days and make further arrangements for inspection.

This decision follows the lessors' rejection on 12 August of SpiceJet chairman and managing director Ajay Singh's offer to pledge his shares as collateral for the airline’s outstanding liabilities. 

The lessors argued that they were unwilling to accept shares from a company with questionable financial stability and expressed frustration over the airline’s failure to make payments despite their patience since December. They demanded SpiceJet disclose Singh’s assets and make alternative arrangements to return the engines.

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Previously, the high court had sought personal guarantees from SpiceJet’s directors in case the airline failed to meet its financial obligations, given its inability to pay its dues. 

SpiceJet contended that grounding the aircraft would severely disrupt its revenue and operations.

In response to its financial difficulties, SpiceJet has announced plans to raise ₹3,000 crore through a qualified institutional placement (QIP) by 30 September to alleviate its financial strain. The airline has assured the court that ₹4.9 crore from the equity proceeds would be used to settle the outstanding dues by the end of September. 

Despite this assurance, the lessors have declined to engage further with the airline.

Team France 01 SAS and Sunbird France 02 SAS filed their case against SpiceJet in December 2023, claiming unpaid dues of over $20 million, according to court filings.

SpiceJet has faced multiple legal battles over unpaid dues in the Delhi high court and the National Company Law Tribunal (NCLT), including contempt charges and regular rebukes for failing to pay creditors and comply with court orders. 

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On 9 June, the high court ordered the registration of a contempt case against SpiceJet's directors for not complying with its order to return two airframes and three engines to lessor TWC Aviation Capital Ltd.

These cases highlight SpiceJet's severe financial difficulties and its struggle to stay afloat.

Reports suggest Ajay Singh plans to reduce his stake in the airline by over 10%, aiming to raise around ₹3,000 crore. Despite this stake dilution, Singh is expected to remain the largest shareholder, with his holding anticipated to decrease to approximately 30-35% after the fundraising is completed by September.

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