Home > News > Air India ordered by UK court to pay £13 million to aircraft leasing company for non-payment of rent on five leased aircraft | India News

Air India ordered by UK court to pay £13 million to aircraft leasing company for non-payment of rent on five leased aircraft | India News


LONDON: Air India was ordered on Friday to pay £13 million (Rs 130 crore) to an aircraft leasing company in Dublin for non-payment of rent and related charges on five Airbus A320-200 aircraft it had leased.
India’s national flag carrier has until January 11, 2021, to make the full payment to Aircraft Limited or else it could face enforcement action.
Simon Salzedo QC, sitting as a judge of the high court, entered summary judgment against the airline for the full debt that Aircraft Limited in Dublin is claiming — $17.6 million (£13.4 million). Salzedo criticised Air India for its “unsatisfactory and discourteous conduct” by failing to respond to the application for summary judgment until after the time the skeleton arguments were due to be filed.
Air India did not contest the application for summary judgment.
Arshad Ghaffar, representing the claimant, said: “Air India is a government-owned entity and the idea it does not have enough money to meet this is simply fanciful. The government of India can always have enough money to fund Air India.”
The commercial court heard Air India had been “making some payments” towards the debt but these were for current amounts accruing that are due, as opposed to historic amounts, and that the airline was “juggling a number of creditors”.
Giles Robertson, representing Air India, said: “We hope to be able to pay what we can. There is a huge amount of uncertainty about the projection of the airline industry at present. Some of the effects of enforcing judgment on an operating airline pose particular issues that may fall into special circumstances.” He requested until January 29, 2021 to settle the debt, but Salzedo fixed the date for 9 am on January 11, 2021, and this was contingent on Air India making an interim payment of $4 million (Rs 29 crore) by midnight of December 31, 2020.
Air India’s Manoj Kumar said in a statement the airline does not “dispute that the claimant in principle is entitled to sums under its leases with Air India. Air India is not seeking to put forward substantive defence to claim.”
Kumar blamed its default on the Covid-19 pandemic and the nationwide lockdown in India from March 24, and the restrictions which followed, such as the suspension of domestic travel until May, and now quarantine restrictions at airports as well as international air travel being limited to evacuation and bubble countries. He said the airline was operating at 40% of its operational capacity on domestic flights.
“The aircraft were on the ground for the lockdown period and traffic is expected to be low for some time to come. As a result we are facing difficulty in making payments. We can agree rent reductions with most of our lessors but cannot agree with this one,” Kumar said.
On June 21, 2014 Air India, as lessee, had entered into five separate, but identical, lease agreements with respect to five Airbus A320-200 aircraft. The court heard that Air India had defaulted on its rent, maintenance reserves and default interest “on various dates between September 2018 and August 31, 2020.”
The terms of the lease stated that legal notices relating to the agreement should be served at the airline’s registered UK address in Middlesex.

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