Another Aircraft Lessor Moves to NCLT Over Non-Paid USD 11 million by SpiceJet

Alterna Aircraft BV Limited, an Ireland-based aircraft lessor has moved an insolvency plea at the National Company Law Tribunal (NCLT) to recover USD 11.1 million and GBP 265,000 awarded to it by English courts against low-cost airline SpiceJet.

According to the report by MoneyControl, the case came up for hearing at the NCLT on January 4 and 5, wherein it was heard at length on maintainability. It is now likely to come up for hearing again on February 8.

According to Alterna's plea, the High Court of England and Wales awarded these amounts in its favour in March 2023. Since SpiceJet has not appealed against the High Court's order for close to a year now, the lessor claims that the order has attained finality. Furthermore, according to the lessor SpiceJet has not paid any monies after the order thus they have claimed the amount to be a 'financial debt' under the Insolvency and Bankruptcy Code (IBC), 2016 and filed an insolvency plea to recover the same.

On January 4 and 5 the court exhaustively heard the arguments by the lessor on how the amount could be classified as a financial debt and how SpiceJet could be admitted to the corporate insolvency proceedings to recover the same. SpiceJet however contended that the plea is not maintainable as IBC is not meant for recovery.

Never Ending Troubles for SpiceJet

Three aircraft lessors filed four insolvency pleas against SpiceJet in 2023 for the non-payment of dues. Other than the aircraft lessors, a tech services provider has also moved an insolvency plea against SpiceJet.

Aircastle Ireland Ltd, Wilmington and Celestial filed petitions, asking NCLT to admit SpiceJet to the insolvency process to enable them to recover their dues. Of these pleas, SpiceJet is in the process of settling with one while one plea is reserved for order and the plea by Willis Lease Finance was dismissed in November.

While the NCLT has issued notice only in Aircastle's first plea, it has been urging the airline to settle with the lessors. In August, SpiceJet allotted over 48 million shares to nine aircraft lessors to clear outstanding dues worth INR 2.31 billion (nearly USD 28 million), as the troubled airline looks to return to full operation

There are a total of four suits pending against SpiceJet in Delhi High Court, all of them initiated by lessors. On December 19, the Delhi High Court on SpiceJet to pay USD 450,000 by January 3 against its dues to two engine lessors. The dispute revolves around the non-payment of dues totalling USD 12.9 million, with SpiceJet being in arrears for two years. The special purpose vehicles (SPVs), representing the lessors, have terminated the engine leases due to alleged breaches by the airline.

The lessors, Team France 01 SAS and Sunbird France 02 SAS moved a suit alleging that the airline has not paid them a sum of USD 12.9 million for over two years. They furthermore asked the court to restrain the airline from using their three engines despite the termination of the lease. All these suits are expected to come up for hearing in January 2024.

Earlier in October, the Delhi High Court granted SpiceJet until October 16 to settle the dispute and warned of restraining the airline from using the engine if no resolution was reached. Engine Lease Finance terminated its lease with SpiceJet on September 27, seeking a court order to prevent the airline from using its engine after the termination.

SpiceJet has recently received approval to raise funds worth INR 2,250 crore by issuing equity shares and warrants to more than 60 companies. Mumbai-based business couple Harihara and Preeti Mohapatra will onboard the airline by investing INR 1,100 crore in return for a 21.98% stake.

(With Inputs from MoneyControl)

In a boost for Tamil Nadu’s advanced R&D ecosystem, aerospace major Boeing is expanding its presence in Chennai and is set to sign an investment MoU with the state for this expansion during the Tamil Nadu Global Investors Meet 2024. Boeing is looking at increasing headcount by around 30% in Chennai, and is likely to add roughly one lakh sq ft of space at its existing R&D centre in Chennai at DLF, Porur as part of this, reported The Times of India.

The amount of investment in this expansion could not be ascertained. Boeing already has over 4,500 people in India as part of its Boeing India Engineering and Technology (BIETC) across Bengaluru and Chennai. While Bengaluru is the largest such centre for the company outside the US, Chennai houses a team of around 800.

The latest investment would lead to additional employment for more than 1,100 people, the official said on condition of anonymity. Presently, the centre has 700-plus people who are engaged in top-notch engineering work. Boeing began its operations in Chennai as Continental Data Graphics (CDG) with 150 people in 2009, reported DT Next.

The Chennai centre became a 100 per cent Boeing subsidiary in 2019-20 as part of a global merging process. After turning into a wholly-owned subsidiary, the Boeing Centre has been on an aggressive expansion spree. The pace of development has led to the aviation major scaling up its presence, said a source aware of the developments.

BIETC was formally established in 2016, and the centre houses Boeing's engineering, research, IT, and analytics team among other functions. The teams offer advanced engineering expertise to Boeing’s defence, space and commercial business. The Indian centres also undertake cutting-edge R&D in the areas of airplane health management, advanced communications and network security and leverage AI, ML, IoT and other emerging tech.

Boeing has been a long-time partner for India in both the commercial aviation and defence sectors. The company’s sourcing from India stands at over USD 1 billion a year from a network of more than 300 suppliers. Tata Boeing Aerospace, a joint venture with Tata Group, produces AH-64 Apache helicopter fuselages and 737 aircraft vertical fin structures for global customers. Boeing, along with GMR Aero Technic, is also establishing a new Boeing Converted Freighter (BCF) line in Hyderabad.

Earlier this year, Boeing had announced a USD 100 million investment in infrastructure and programs to train pilots in India, which came in on the heels of Air India signing firm orders of over 200 jets from Boeing, including 20 787 Dreamliners, 10 777Xs, and 190 737 MAX narrowbody aircraft.

(With Inputs from The Times of India & DT Next)

The Centre has refused to allow the Delhi Airport to levy an Airport Development Fee (ADF) for the development of an elevated air train corridor which is to connect its three terminals. The project is expected to cost INR 3500 crore.

According to The Economic Times report, the Ministry of Civil Aviation, alternatively, asked the GMR Group-operated Delhi International Airport Ltd (DIAL) to plan another way of funding and levy a User Development Fee (UDF) after the train is operational. DIAL, as per sources cited in ET, is planning to raise external funding by debt or equity.

The corridor aims to reduce transfer times for passengers who now have to depend on other modes like buses and taxis. The project is an important component of the Centre’s plans to develop the capital city into a hub, commensurate with the airports in Dubai and Singapore.

While ADF is a pre-funding mechanism for constructing infrastructure projects in airports, allowing operators to charge passengers to cover the cost of an ongoing project, UDF (User Development Fee) is levied later when the airport is unable to generate enough returns on investments. Moreover, ADF faced opposition from the Airports Authority of India (AAI) as it is a capital receipt, the share of which does not come to it. UDF, a part of total revenue, has to be shared with the AAI under the privatisation agreement of 2006.

In contrast, the UDF will be part of the total revenue, of which 46% has to be shared with the AAI under the privatisation agreement of 2006. In FY 23, AAI’s share of revenue from private airports accounted for a fourth of its total revenue.

ADF has also been criticised in the past by the Supreme Court and the Comptroller and Auditor General.

“The previous government had allowed airports to levy ADF for building runways and terminals, which was slammed as a violation of the privatisation agreement and a post-contractual benefit. So, we were cautious not to allow it,” an official said. “Internationally, it is an accepted practice that development fees are levied for financing airport upgradation projects. Since it has not been allowed, there needs to be a redesign of the project to ensure faster return for financers,” an official of the airport said.

One option is to increase the number of stops from four to six so that the number of paying passengers increases, ensuring quicker recoveries. The air train will be free for transit passengers. “The original proposal was to have four stops at T3, cargo terminal, Aerocity and T1 with a transit time of 8-10 minutes. But the project may have to be tweaked to have two more stops at Aerocity so that the number of paying passengers increases,” he said.

(With Inputs from The Economic Times)

In a significant development affecting air travel in Spain, ground staff at IAG-owned Iberia airlines have announced a four-day strike at several Spanish airports, leading to the cancellation of hundreds of flights. The strike, initiated by ground staff, including baggage handlers, comes after unsuccessful talks between unions and the company, adding another layer of complexity to an ongoing contract dispute.

Reasons Behind the Strike

The primary cause of the strike lies in the dissatisfaction among ground staff regarding contracts signed with new service providers at Spanish airports. The change in service providers, initiated by Spain's state-controlled Aena in September, stirred controversy as these new contractors took over services previously provided by Iberia in many airports.

Affected Airports and Flight Cancellations

The strike, planned from January 5 to January 8, is set to disrupt travel plans during Spain's traditional Epiphany holiday. While Madrid airport is expected to remain unaffected, airports in Barcelona, Palma de Mallorca, Ibiza, Malaga, Bilbao, Gran Canaria, Tenerife, and Alicante will experience significant disruptions. Iberia, Iberia Express, and Air Nostrum have already canceled 400 flights, with an additional 300 cancellations from other IAG partner airlines.

Unions' Perspective

Spain's two main unions, UGT and CCOO, are leading the strike, expressing dissatisfaction with the new contracts and the potential impact on workers' rights. Paloma Gallardo, the Iberia representative for union CCOO, emphasized the seriousness of the conflict and expected widespread observance of the strike at all airports, including Madrid.

Company's Response

Iberia, in response to the strike, labeled it as "irresponsible" and is challenging the new contracts in Spanish courts. The airline's press office mentioned that only 3,800 of its 8,000 ground service workers are stationed at airports now managed by new contractors, creating uncertainty regarding the extent of the strike's impact.

Customer Impact and Contingency Measures

Despite the strike being anticipated for weeks, the airline claims that more than 90% of customers have found alternative solutions to their canceled flights. However, the widespread disruptions during a holiday season pose challenges for affected travelers. The Iberia press office emphasized that efforts are being made to minimize the impact on passengers.

Conclusion

The Iberia ground staff strike reflects the intensifying discord between workers and the airline, fueled by changes in service providers at Spanish airports. As the industrial action unfolds, the aviation industry, travelers, and the Spanish courts will closely monitor the repercussions of this dispute, raising questions about the future of labor relations within the country's aviation sector.

With Inputs from Reuters

In a strategic move to modernize its fleet, Condor, the German leisure specialist airline, has inked a deal with BOC Aviation to dry-lease two new-build A320-200Ns and four A321-200Ns. The deliveries for these aircraft are scheduled between 2027 and 2028, marking a significant step for Condor in enhancing its operational capabilities.

BOC Aviation's Airbus Deal

BOC Aviation, a major player in the aircraft leasing industry, has secured a new order directly from Airbus to fulfill Condor's requirements. The leasing company, headquartered in Singapore, has not disclosed the specific duration of the dry leases, but the agreement underscores the growing trend of airlines turning to leasing as a flexible and cost-effective means of acquiring new aircraft.

Condor's Fleet Transition Plans

Currently operating a diverse fleet, including A320s, A321s, A330s, B757s, and B767s, Condor has ambitious plans to revamp its narrowbody fleet. The airline has a firm order for four A320-200Ns and six A321-200Ns directly from Airbus. Additionally, Condor has confirmed commitments for an extra nine A320-200Ns and twenty-two A321-200Ns, with contributions from Air Lease Corporation, further bolstering its commitment to the A320neo Family.

BOC Aviation's Growing Airbus Portfolio

According to data from the ch-aviation fleets ownership module, BOC Aviation currently owns seventy-eight A320neo and thirty A321neo aircraft, including four A321-200NX(LR)s. The lessor, however, has not leased any aircraft to Condor until this recent commitment. With the new order, BOC Aviation's unfilled orders from Airbus include forty-four A320-200Ns, sixty-five A321-200Ns, and ten A321-200NY(XLR)s, highlighting the lessor's confidence in the long-term prospects of these aircraft.

Condor's Diversification and Growth Strategy

Condor's fleet expansion is not limited to narrowbody aircraft, as the airline plans to add two A321-200s previously operated by Heston Airlines and ten additional A330-900s. This diversified approach underscores Condor's commitment to meeting the evolving demands of the leisure travel market.

Conclusion

In summary, Condor's collaboration with BOC Aviation for the dry lease of new Airbus A320neo and A321neo aircraft represents a pivotal step in the airline's fleet modernization strategy. As the aviation industry continues to recover from the challenges posed by the global pandemic, such strategic fleet investments position Condor for sustained growth and efficiency in the competitive leisure travel sector.

With Inputs from ch-aviation