Air India has got some reprieve from a United Kingdom Court as it allowed India's flag carrier time until early Jan to make payments in a case of unpaid dues of over $17.6 million, with the judge accepting the “broad thrust” of the airline's financial difficulties, especially due to the grounding of flights during the Coronavirus lockdown.

However, Judge Simon Salzedo issued a strong rebuke to Air India for its “unsatisfactory & discourteous” conduct in relation to the case by not engaging with the process in a timely manner.

The hearing, held remotely at the Commercial Court division here on Friday, involved unpaid dues of over $17.6 million to China Aircraft Leasing Company Limited (CALC) as part of an aircraft lease agreement for rent & maintenance.

“I accept the broad thrust of Air India's submission of the financial difficulties it has been facing along with the rest of the aviation sector & also note that it has been making some payments to the lessors,” the judge noted, as he granted Air India until Jan 11, 2021, to clear the overdue payments. 

However, that extension is conditional on the airline paying in the already committed amount for the month of Dec, amounting to a total of $5 million.

The lawyer for CALC, a global aircraft leasing company, had sought immediate payment & argued that Air India being a state-owned airline can always seek funds from the Indian Govt & is only seeking to delay matters for its client, who has been waiting for nearly a year for the payments.

Air India, on the other hand, argued that it doesn't dispute that the claimant is entitled to payments for leased aircraft, but as a result of severe constraints on the airline industry, most of its aircraft have remained grounded. The airline claimed that while it had managed to strike rent reduction & payment plans with other lessors, talks with CALC had been unproductive.

It urged the Court for time until Jan 29 for the payments in order to avoid disruptions to its United Kingdom & Europe operations, especially over the Christmas & New Year holiday period, which would go on to further “hinder” its ability to pay.

The Judge struck a compromise & has given Air India time until Jan 11 to clear the sums outstanding.

The state-owned carrier has been seeking a buyer for some time now as the government wants to divest its 100% stake in Air India & budget carrier AI Express.

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