Moneycontrol PRO
you are here: HomeNewsBusiness

SpiceJet enters settlement with De Havilland Aircraft of Canada, all legal proceedings stayed

Once settlement terms are complied with, all legal proceedings will be withdrawn from the UK Court and Delhi HC

December 15, 2021 / 11:18 AM IST
Representative Image

Representative Image

Domestic carrier SpiceJet has entered into a settlement deal with De Havilland Aircraft of Canada (DHC) and all legal proceedings have been stayed for compliance.

DHC manufacturers the DHC-8-400 aircraft. It moved the Delhi Court against the Indian airline, seeking payments for the order of a Q400 aircraft that was not paid. The manufacturer has now stopped production of the aircraft.

“The parties have agreed to settle all their disputes under and related to the aircraft purchase agreement and component solution agreement, subject to compliance with the terms of settlement,” according to a statement from SpiceJet issued on December 15.

“All related proceedings before the UK Court and execution proceedings before the Delhi High Court have been stayed and will be withdrawn upon compliance with the settlement terms,” it said.

What happened?

The case between SpiceJet and De Havilland involves the delivery of 14 Dash 8-400 turboprops that SpiceJet had ordered. As part of the settlement SpiceJet is expected to have inducted a few of the aircrafts from the aforementioned deal in order to maintain a long-term relationship with the aircraft manufacturer.

In 2017, SpiceJet signed a purchase agreement for 25 Q-400 aircraft. It took delivery of five aircraft, but failed to make pre-delivery payments for 15 aircraft in the order. It also did not take delivery of three of those planes. Later, the Canadian aircraft manufacturer suspended the contract

The matter came to light when SpiceJet did not cough up pre-delivery dues for 14 of the said aircraft. In February 2020, De Havilland sued the low cost carrier for the same in a UK High Court.

In August, De Havilland dragged low-cost-carrier to Delhi HC to implement the $42.9 million claim decree granted by a UK court.

The new settlement is another victory for SpiceJet after the company had just a month reached an agreement with Boeing under which the airplane maker agreed to provide “certain accommodations and settle the outstanding claims related to the grounding of MAX 737 aircraft and its return to service.”

Other disputes

In September, SpiceJet had had “commercially agreed” to a settlement over the lease of Boeing MAX aircraft from CDB Aviation. Just three weeks before that the airline had reached a similar deal with Avolon, another plane lessor.

The airline was facing a number of legal proceedings against it by international lessors after the aviation regulator Directorate General of Civil Aviation had in 2019 banned the Boeing MAX 737 from flying in the Indian skies and lessors were not able to take back the grounded aircrafts they had leased out to SpiceJet.

The DGCA on August 26 rescinded its order grounding the Boeing 737-8 and 9 models allowing the airline to operate the planes in the domestic market and allowing the airline to reach settlement deals with lessors without returning the planes.

Besides this, SpiceJet is also battling an unsettled dispute with KAL Airways, its former owner. Ajay Singh, the current chairman of SpiceJet, bought the airline after the December 2014 crisis.

Moneycontrol News
first published: Dec 15, 2021 09:44 am