Indian court chides SpiceJet as last-minute lessor settlement forces judgement delay

An Indian bankruptcy court harshly criticized SpiceJet on Monday for a last-minute settlement with one of eight aircraft lessors whose bankruptcy cases were set for rulings. The court deemed the settlement a wasted use of judicial time, signaling further financial distress at India's fourth-largest carrier. The tribunal judge expressed concern that more such deals might be forthcoming, calling it "a mockery of the entire process."

The hearing coincided with a series of legal disputes between SpiceJet and aircraft leasing firms, which were expected to culminate in rulings on eight bankruptcy petitions. The ongoing legal battles placed significant pressure on SpiceJet's financial situation, potentially triggering a court-supervised resolution process where an independent expert would oversee the airline while creditors worked out a restructuring plan.

Despite the court's decision to postpone the judgement until Wednesday to allow time for the settlement agreement, seven other SpiceJet insolvency cases remained pending. Lawyers for some of the other lessors urged the court to issue its rulings, alleging a lack of respect for judicial proceedings. SpiceJet, once India's second-largest domestic airline, has faced mounting financial difficulties due to soaring losses and legal entanglements.

Its market share in the domestic market fell to 1.9% in June from an estimated 15% in 2019. The airline had received a 1.5 billion rupees ($15.69 million) government-backed credit program to stabilize operations, yet aircraft lessors continued to apply pressure. In July, two entities linked to China's ICBC sought to deregister four Boeing 737 MAX aircraft leased to SpiceJet, and multiple lessors had issued default notices on the airline throughout the year.