Indian no-frills carrier SpiceJet has entered into a settlement deal with De Havilland Canada (DHC). The Canadian company had earlier this year taken SpiceJet to UK courts to recover $42.9 million for failing to make pre-delivery payments after ordering 25 Dash-8-400 turboprop aircraft. In a filing to the Indian stock exchange, SpiceJet says that all related proceedings at a UK court have been stayed and will be withdrawn.
At the 2017 Paris Airshow, SpiceJet signed a purchase agreement for 25 Bombardier Dash 8 Q400 aircraft as they were called then, plus 25 options. It was one of the biggest orders for Bombardier. The airline took delivery of five aircraft but failed to make pre-delivery payments for fifteen aircraft in the order. It also did not take delivery of three of those planes which were built in 2019 but are still at DHC in Downsview. SpiceJet had argued that its obligation to make pre-delivery payments on specific aircraft was suspended by agreement between the two sides, under an April 2019 change order.
But De Havilland Canada, which took over the program when Longview Partners bought it from Bombardier, countered that the change order did not suspend this obligation. It said that only the scheduled delivery months were suspended. SpiceJet claimed the suspension of scheduled delivery months automatically suspended payment liability because the two were linked. The Canadian aircraft manufacturer suspended the contract subsequently.
In February 2020, De Havilland sued the Indian carrier for the same in a UK High Court, which ruled in favor of the airframer. But in its 2020-results report, the airline said on June 30 that it had filed a claim itself against DHC of Rs3.2 billion “for declarations, liquidated damages, interest, and costs relating to the Company’s alleged breaches of, and the manufacturer’s purported termination of the purchase agreement for certain undelivered aircraft.” Last August, De Havilland dragged the low-cost carrier to Delhi High Court to implement the $42.9 million claim decree granted by the UK court.
On December 16, SpiceJet and DHC announced their settlement that was agreed on three days before: “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 the settlement,” read the statement from SpiceJet. “All related proceedings before the UK Court and execution proceedings before the Delhi High Court have been stayed and will be withdrawn upon compliance with the settlement terms.”
While the settlement details have been kept confidential, as a part of the settlement, SpiceJet is expected to induct some of the aircraft from the order.
Ajay Awtaney is the Founder and Editor of Live From A Lounge (LFAL), a pioneering digital platform renowned for publishing news and views about aviation, hotels, passenger experience, loyalty programs, travel trends and frequent travel tips for the Global Indian. He is considered the Indian authority on business travel, luxury travel, frequent flyer miles, loyalty credit cards and travel for Indians around the globe.