SpiceJet’s aircraft lessor Celestial Aviation to withdraw insolvency plea against airline

In a relief for cash-strapped airline SpiceJet, aircraft lessor Celestial Aviation is expected to withdraw its insolvency plea against the carrier. The domestic airline on February 26 informed the National Company Law Tribunal (NCLT) that the payment dispute with the lessor had been settled.

This comes against the backdrop of the plea moved by aircraft lessor Celestial Aviation in India’s bankruptcy tribunal seeking insolvency proceedings against SpiceJet. The lessor had claimed unpaid dues of $30 million.

SpiceJet has submitted in the NCLT that funds are being transferred to Celestial as per settlement negotiation and that the lessor will withdraw proceedings shortly. The tribunal has also recorded that the payment dispute has been settled and that it awaits completion of formalities.

Both the firms had in October 2023 mutually agreed for the settlement outside the courtroom through amicable means.

Celestial Aviation Services was the fifth lessor to have sought insolvency proceedings against SpiceJet. The company, in August 2023, filed the plea under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016, to initiate a Corporate Insolvency Resolution Process (CIRP) against SpiceJet.

Separately, SpiceJet on February 22 said it has secured an additional ₹316 crore, taking its total funds raised to ₹1,060 crore through a preferential share issue. The fresh capital infusion in the struggling airline came amid its recent announcement of slashing its workforce by 10-15%.

In January SpiceJet had received ₹744 crore as the first tranche of funds through the allotment of securities on a preferential basis. On December 12, 2023, the airline said it would raise fresh capital of ₹2,250 crore through the issuance of securities.

"SpiceJet has raised an additional ₹316 crore, bringing the total investments raised to ₹1,060 crore under its preferential issue," the airline said in a statement.

SpiceJet has been facing headwinds for the last couple of quarters for want of funds, leading to the grounding of several aircraft and returning some of the leased planes to the lessors. Some of its lessors have dragged the airline even to court for non-payment of lease rentals. As of February 21, the airline had nearly half of its 65 aircraft fleet on the ground with 35 planes in service and remaining parked, as per the aircraft fleet tracking website Planespotter.