The engineering subsidiary of flag carrier Turkish Airlines - Turkish Technic - is suing Indian low-cost carrier SpiceJet for approximately $14.5 million. Such drastic legal actions stem from Turkish Technic alleging that the budget carrier has not paid several invoices for services provided and has yet to return loaned aircraft parts.
SpiceJet apparently breached the agreed-upon contract
Turkish Technic had filed a claim to the High Court of Justice of England and Wales last December, claiming that SpiceJet and its maintenance and repair subsidiary, SpiceJet Technic, had breached the agreed-upon and signed terms of their aircraft component lending agreements.
The contract was inked in 2018, which saw Turkish Technic agreeing to supply SpiceJet with working aircraft parts in exchange for non-serviceable ones. In return, the engineering company would charge the low-cost carrier for repairs and lend a stockpile of replacement components for emergencies.
However, this contract was terminated in 2021 when both companies restructured a new deal with similar terms. Since the two companies have now inked a completely different agreement, Turkish Technic claims SpiceJet was supposed to return the stockpile of replacement components loaned from the 2018 deal, but the airline has yet to do so.
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SpiceJet allegedly owes Turkish Technic lots of money
Besides not returning the borrowed equipment, the Turkish engineering company is further claiming that SpiceJet has also failed to pay several invoices issued between March 2021 and December 2022. The invoices were for repairs and amounted to over $12.5 million, which Turkish Technic seeks to claim.
Turkish Technic also alleges that the low-cost carrier owes it approximately $2 million as part of a signed guarantee to cover some liabilities. For the different amounts SpiceJet owes to Turkish Technic, the engineering company will also seek to claim interest - which would be a lot of money from the low-cost carrier.
An unstable few years for SpiceJet
Unfortunately, the legal suit from Turkish Technic is not SpiceJet's first run-in of being hit with expensive claims. The budget carrier has had a rather financially turbulent past few years, primarily due to the pandemic, and has since racked up debts with numerous companies.
Back in 2020, De Havilland Canada sued the Indian carrier for almost $43 million after failing to pay for the delivery of 19 Dash 8-400s. Then in 2021, two aviation companies and one asset consultant, Wilmington Trust SP Services, sued SpiceJet for over $16.2 million after alleging that it owed them for defaulting on three aircraft leasing agreements.
These were just a glimpse of the lawsuits faced by SpiceJet in recent years, and while some suits were eventually settled with the airline on the losing end, it still has racked up debts owed to aircraft lessors. The airline tried to seek an immediate settlement by offering some of these lessors a future equity stake in the company, but no company wanted to bite.
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Bottom line
If history is to repeat itself, then the likelihood of SpiceJet losing the lawsuit from Turkish Technic is certainly high. This would leave the low-cost carrier bleeding financially yet again when it is still struggling to recover.
Not only is SpiceJet financially strapped, but the airline is also losing capacity gradually as some aircraft have been deregistered at the request of the aircraft lessors, to which it still owes money. While the low-cost carrier is adamant that the deregistering does not affect its flight operations, it does beg the question of how long SpiceJet can continue to sustain itself in such a fashion.