SpiceJet's plan to hive off cargo business faces challenge from creditors

 Lessor, lenders object to the airline's plan to hive off logistics arm into a separate business before clearing pending dues

Ajay Singh-led SpiceJet’s plans to hive off its logistics and cargo business into a separate entity called SpiceXpress is facing legal hurdles with lenders and aircraft lessors challenging the move.

One of SpiceJet’s lessor-Goshawk, along with its trustees, has moved the Delhi High Court asking for an injunction on the airline’s plan to transfer any of its assets to a separate company until the airline clears its pending dues of around $16.2 million as lease rentals on three aircraft.

In its interim order, the Delhi High Court has restrained SpiceJet from alienating the assets worth the amount into a separate company.

“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 development is a big hurdle for the airline as hiving off and monetizing the cargo unit remains one of the key strategies to recapitalize the company. The next date of hearing is on 29 November. SpiceJet is in talks with multiple private equity investors to sell shares in the logistics arm to raise money.

People aware of SpiceJet’s business plans indicated that in their talks investors have made it clear that they want the cargo business to be ring-fenced and at an arm’s length distance from the passenger business.

The airline has also approached the Ministry of Civil Aviation for a new Air Operators Permit for the cargo arm and has also set up management, separate from the passenger business.