Canadian aircraft manufacturer De Havilland Aircraft is reportedly suing its largest customer SpiceJet for nearly $43 million (approx. Rs 320 crore) in damages after the Indian domestic carrier failed to pay for the delivery of 25 Dash 8-400 turboprop aircraft.
Philippa King, spokesperson for De Havilland Canada confirmed the development to Smart Aviation-APAC. She said the company had filed a $42.9 million lawsuit for damages stemming from cancelled purchase agreements after SpiceJet failed to take delivery of 19 aircraft and defaulted on several payments.
SpiceJet denied De Havilland's claims calling them "completely misplaced and without any default."
De Havilland claims the Indian carrier paid $7 million (approx. Rs 52 crore) in down-payments on the 19 aircraft and has terminated the contracts arguing they are now void, the Canadian manufacturer said, adding that it is now entitled to lease or sell the 90-seat aircraft to other operators.
The SpiceJet spokesperson, however, countered, "SpiceJet has already taken delivery of five aircraft in accordance with the purchase agreement and the delivery schedule of future aircraft was kept in abeyance/deferred and therefore it does not warrant any claim. SpiceJet will vehemently defend its stand."
The Canadian company further added it would recover ‘liquidated damages’ to the tune of $2.5 million (approx. Rs 18 crore) per aircraft, plus interest based on the three-month London interbank offered rate (Libor), the report added.
The suit has been filed with the High Court of Justice of England and Wales. King refused to comment further "as the matter is before the court".
SpiceJet's spokesperson also said they would not like to comment further as the "matter is now sub-judice."
CAPA data shows SpiceJet operates 62 Boeing 737s and 32 Dash 8-400 turboprops, besides its grounded Boeing 737 Max 8 fleet. The Indian carrier did not respond to Smart Aviation-APAC’s queries.
The development is significant as SpiceJet is De Havilland Canada’s largest buyer.
When De Havilland parent Longview Aviation Capital was negotiating the acquisition of the Dash 8-400 programme from Bombardier in 2019, SpiceJet made up close to 50 percent of the order backlog, the report noted.
Combined with the delivery statements from the French aviation giant, the domestic carrier has a total order backlog of 52 aircraft as of December 2018.
(Currency conversion rate as on March 19, 2020)
Discover the latest business news, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
