India’s no-frills airline SpiceJet and Canadian aircraft manufacturer De Havilland had been at loggerheads for quite some time over pre-delivery payments for Dash 8 turboprops ordered by the carrier. It has now emerged that the LCC has settled the dispute with the planemaker, and all previous court orders related to the matter will be withdrawn once the settlement terms are met. Let’s find out more.
Indian low-cost carrier SpiceJet has settled a payment dispute with Canadian planemaker De Havilland. Photo: Venkat Mangudi via Wikimedia Commons
Pre-delivery payments not made
In 2017, SpiceJet entered into an agreement with De Havilland to purchase 25 Dash 8-Q400 airplanes. However, things turned sour between the two when De Havilland claimed that SpiceJet took delivery of five of the 25 planes and halted pre-delivery payments for most of the remaining aircraft.
As explained in a BusinessToday report, De Havilland was entitled to terminate the relevant aircraft and claim liquidated damages if SpiceJet defaulted on the pre-delivery payments. Things came to a head in February 2020 when De Havilland terminated the entire purchase agreement and sued the airline in a UK court for almost $43 million for a contractual dispute. A separate application was then filed with the Delhi High Court to implement the UK court order.
SpiceJet came up with its own set of defenses, including citing a change order to the purchase agreement, which supposedly suspended the scheduled delivery dates of 16 airplanes. The carrier also questioned De Havilland’s method of quantifying the loss it suffered with each airplane.
De Havilland had sued the carrier for almost $43 million for a contractual dispute. Photo: Getty Images.
The dispute now seems to have settled after the carrier issued a statement on Wednesday, which said,
“The company is pleased to announce that on December 13, 2021, it has entered into a settlement agreement with the aircraft manufacturer of DHC-8-400 aircraft (De Havilland Aircraft of Canada Limited) wherein the parties have agreed to settle all their disputes under and related to the aircraft purchase agreement and component solution agreement, subject to compliance with the terms of settlement.”
The exact details of the settlement, however, have not been revealed by SpiceJet.
One of many
The Indian LCC has found itself fighting court orders and reaching settlements in a handful of situations lately. Just recently, the airline was asked by the Madras High Court to wind up operations for failing to pay over $24million in dues to its Swiss-based MRO service provider. The court then stayed the order for three weeks subject to the condition that the carrier deposits $5 million within two weeks. The airline is likely to appeal against the order before a higher bench.
SpiceJet was in the news earlier over disputes with its Swiss-based MRO service provider. Photo: Getty Images
Last month, the LCC also reached a settlement with Boeing over the 32-month grounding of the 737 MAX, acquiring two 777-200ERs from the American planemaker as compensation. This came after three financial years of SpiceJet attempting to claim compensation from Boeing. It remains to be seen how the carrier utilizes the widebodies, whether on long-haul passenger services or cargo operations.
What are your thoughts on the disputes surrounding SpiceJet? Please share your comments below.
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