Creditors challenge Spice Jet’s Intention to split off its Cargo Division

Shivangi Prakash-

Published On: September 27, 2021 at 12:25 IST

SpiceJet’s ambitions to spin off its logistics and freight operations into a separate company dubbed SpiceXpress are facing legal challenges from Lenders and Aircraft Lessors.

SpiceJet’s Lessor, Goshawk, and its Trustees have petitioned the Delhi High Court for an Injunction against the Airline’s proposal to transfer any of its assets to a separate business unless it pays $16.2 million in unpaid lease fees on three Aircrafts.

The Delhi High Court has issued an Interim Order prohibiting SpiceJet from transferring the assets worth the amount to a different entity.

 “Till further orders, the judgment debtor is restrained from transferring/alienating its assets to the tune of decretal amount,” the Order by the Delhi High Court said.

The result is a significant setback for the airline, since divesting and monetising the cargo arm remains one of the company’s primary initiatives for recapitalization.

The next hearing date is scheduled to be November 29. SpiceJet is in negotiations with a number of private equity firms about selling shares in its logistics division to raise funds.

Investors have made it clear in their conversations with SpiceJet that they want the cargo operation to be ring-fenced and kept at arm’s length from the passenger sector, according to people familiar with the company’s intentions.

The Airline has also applied to the Ministry of Civil Aviation for a new Air Operators Permit for its cargo division, as well as establishing a separate management structure from its passenger division.

 “We would not want to get into the detailed interpretation of the court matter as the same is sub-judice. We have been in discussion with all MAX lessors for settlement and return to service of these aircraft. We have already done so with Avolon and CDB Aviation and discussions with other lessors are continuing including Goshawk. None of the MAX lessors (including Goshawk) have terminated any of the leases and they are continuing to make all commercial efforts to resume safe operations of the MAXs,” a spokesperson of the Airline said.

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