Saturday, October 10, 2020

SpiceJet taken to court in UK over unpaid rent

Less than two months before SpiceJet begins its services connecting India to the United Kingdom, it now faces a lawsuit in London over unpaid charges to the tune of Rs 200 crore.

Mirror has exclusive details of the claim lodged last month by BOC Aviation and Wilmington Trust Services, both based in Ireland, with the Business and Property Courts at the High Court in London. They claim that SpiceJet has failed to pay rents and other charges as per the aircraft lease agreements they signed with the airline. Both the claimants maintain they sent several notices to SpiceJet along with reminders and follow-ups seeking the payments before approaching the court.

Mirror can also reveal that SpiceJet sought an extension of a month to file a reply, which the court declined and instead set a deadline of October 19 for the airline’s legal team to serve its defence.

The case relates to three Boeing 737-800 aircraft leased from BOC Aviation in May 2019, and three Boeing 737-Max 8 aircraft leased from Wilmington Trust Services in Nov-December 2018.

SpiceJet had to pay US $220,000 per month (Rs 1.6 crore) for each of the three 737-800 aircraft. BOC Aviation claims that SpiceJet has been late in making payments since August 2019, and as of 3 September 2020, the airline has not paid rent to the tune of US $3,960,000 (Rs 29 crore), which represents outstanding rent from April to September 2020.

Supplemental rent payable to BOC Aviation is outstanding from January to September 2020 for US $2587751.88 (Rs 19 crore). The final figure that BOC Aviation is claiming, including interest accruing on a daily basis, comes to US $6650978.29 (Rs 48 crore) as of September 3, 2020.

SpiceJet has business relations with BOC Aviation that goes back to 2013 when it signed an agreement to lease six Boeing 737-800 aircraft. They seem to have enjoyed good business relations, but this latest case shows a dip in confidence at a time when SpiceJet has announced plans to expand its services to the key United Kingdom market.

The second claimant, Wilmington Trust Services, joined the suit in its capacity as trustee for BOC Aviation, and from whom SpiceJet leased three Boeing 737-MAX 8 aircraft in the last quarter of 2018. With respect to the three 737-MAX 8 aircraft, the airline is facing claims that it has failed to pay the monthly rent since April 2019 which comes to a staggering US $19,485,334.29 (Rs 140 crore). The supplemental rent owed to them is an additional US $755,046.21 (Rs 5.6 crore). The final figure that Wilmington Trust is claiming, including the interest component, comes to US $21314015.67 (Rs 156 crore).

10/10/20 Danish Khan/Mumbai Mirror

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