The dispute between regional airline TruJet and leasing company Elix over unpaid dues for three ATR72-500 aircraft has further escalated with the airline continuing to fly the aircraft despite being served with multiple notices for their grounding. TruJet owes Elix over $5 million as dues over a span of 12 months.
BusinessLine had reported in September 2020 that Elix had served grounding notices to TruJet over unpaid dues. Now, sources have told this newspaper that TruJet has continued to fly the three ATR72-500 aircraft despite the notices.
Elix confirmed the same in response to a query sent by BusinessLine. “Various formal notices were issued to TruJet recently in relation to our aircraft,” the company said adding that it could not disclose more information due to confidentiality. However, it said, “we do continue to work with the airline to recover and restructure any arrears,” a company spokesperson said.
According to sources, Elix has written a letter to the DGCA requesting to ground the aircraft, “Grounding will be enforced via DGCA and the airline will need to fund the default.”
However, in response to BusinessLine’s query, the DGCA said that the matter was between the lessor and the lessee. “It is a commercial relationship and we are not involved.”
The leasing company added that it has been working on restructuring with Trujet for some time now, not only due to the effects of Covid-19 on its business but its historical performance. “We understand a new shareholder is in process of acquiring a significant interest in the airline and we continue our due diligence of them and all potential new shareholders.”
Interups Inc. recently acquired a 49 per cent stake in the airline, which had raised hopes of lessors.
Renegotiating contracts
When contacted Laxmi Prasad, Chairman of Interups, said it is “renegotiating TruJet’s contracts with the lessors and vendors.” He explained that the company’s debt stood at ₹170 crore whereas its assets were only ₹38 crore.
“We have no option but to renegotiate our contracts and agreements with lessors and vendors. It's bad business to continue having a huge debt and losses compared to lesser profits and assets — we have to break-even. As an investor, I am doing what I have to for the sake of the business.” He further added that the company plans to settle its books by July.
Elix further said that it will continue to support TruJet in its recovery “provided critical milestones are met and compliance is observed.”
TruJet and its parent company, Megha Engineering and Infrastructure Limited (MEIL), did not offer a comment.