SpiceJet Sued For Over $27m In Unpaid Leasing Fees

SpiceJet has been sued for over $27mn in a UK court by lessors over unpaid aircraft leases and fees. BOC Aviation and Wilmington Trust Services are suing the Indian low-cost carrier over not paying fees for six 737s. SpiceJet has reportedly not paid leases on the three 737 MAXs since its grounding in April 2019.

SpiceJet has been sued for $73mn in a UK court by two lessors. Photo: Jonathan Payne via Flickr

Unpaid leases

Two Ireland-based aircraft lessors, BOC Aviation and Wilmington Trust Services are suing SpiceJet for not paying aircraft fees. BOC has leased SpiceJet three 737-800s while Wilmington has leased them three 737 MAX 8s. According to the court filing, seen by the MumbaiMirror, the unpaid fees with interest amount to $27.9 million.

The filing also gives an insight into how much SpiceJet pays for its aircraft leases. For a 737-800, the airline has to pay $220,000 per month to BOC Aviation. For the newer 737 MAX 8, SpiceJet roughly pays $341,800 per month to Wilmington. Lease figures are typically shrouded in secrecy and rarely seen in public, however, this is an exceptional circumstance.

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SpiceJet 737
SpiceJet pays $220,000 every month for a 737-800. Photo: Boeing

SpiceJet has reportedly been making late payments since August 2019 and has not made payments since April for its 737-800s. The airline has also not paid leases for the 737 MAX 8 since the type was grounded worldwide in April 2019, a shocking move. SpiceJet has been hit hard by the current crisis, reporting heavy losses in the last year.

Fees adding up

Aircraft leases also come with a component of interest, which means the figure SpiceJet owes grows every day. The decision to not pay for its 737 MAX lease comes as SpiceJet is awaiting compensation from Boeing for the year of grounding. The lessor’s decision to sue the airline comes after months of notices and follow-ups for payment of the leases.

SpiceJet 737 MAX
SpiceJet has been awaiting Boeing compensation for the grounded 737 MAX. Photo: Boeing

SpiceJet will respond to the court on October 19th and the case will proceed in the coming weeks. The airline has an all-737 fleet, with a massive order for the new 737 MAX. Lessors do have the right to repossess their aircraft from the airline, but still require the payment of outstanding fees.

London flights soon

The low-cost airline is facing multiple legal challenges, with Bombardier suing the airline in March and long-standing dispute with the previous owners. All of this comes as SpiceJet continues to rapidly expand operations, starting flights to London in the winter and leasing widebody cargo aircraft.

Aircraft maker Bombardier has also sued SpiceJet, adding to the airline’s woes. Photo: Premnath Kudva via Wikimedia Commons

The coming months will be difficult as SpiceJet fends of struggling demand and an array of legal challenges. The airline is also running low on cash which means losing any legal challenge could further stress the airline’s finances.

Despite all this, SpiceJet is still optimistic about the future, launching long-haul routes and hoping its 737 MAX fleet back into service this year.

Have you flown with SpiceJet? How was your experience? Let us know in the comments!