With its more mature fleet than other Indian carriers, Spicejet is seen as a good route into India's mid-life market for lessors.
Not for the first time, Indian low-cost carrier Spicejet is embroiled in disputes with lessors over unpaid rents and aircraft repossessions.
In certain cases, courts have already ruled against the Indian carrier, while in others insolvency proceedings have been brought by disgruntled lessors.
Therefore, it was surprising earlier this month to see Spicejet sign a CFM56 engine lease and maintenance deal with FTAI Aviation, particularly as the airline’s previous engine lessor, Willis Lease Finance, has its own court date with Spicejet next month, again seeking insolvency.
However, a person close to the recent deal tells Aviation Week why it makes sense for U.S.-based FTAI Aviation.
First, he notes that India’s growth prospects make it a very attractive market and FTAI “would like to be part of that story.” However, with market leaders Air India and Indigo focusing on young aircraft, Spicejet offers the best route into India for a mid-life engine lessor.
Second, he notes that Spicejet will use government provided emergency funds to pre-pay engine leases and maintenance out to “six to nine” months.
Despite its troubles, Spicejet is trying to reactivate its fleet quickly, which makes FTAI’s module-exchange-based maintenance preferable to longer and costlier engine overhauls.
And while FTAI may lease up to 20 engines to Spicejet, it is starting with six to limit its exposure. Furthermore, the source notes that these engines are a “bit stubbier,” representing the lower value units in the FTAI Aviation portfolio.
He also notes that the maintenance deal gives FTAI Aviation some leverage over Spicejet as the lessor will have custody of engines at certain points.
Finally, he concludes that “most of the pain has already been suffered at Spicejet.”
