Vietnamese low-cost carrier VietJet is facing a legal dispute, as London’s High Court ruled that the airline owes FW Aviation US$181.8 million (RM794.8 million) for four Airbus A321 aircraft.
The ruling primarily revolved around financial disputes regarding termination values for aircraft leases and the consequent rights to possession.
The case stems from the grounding of these planes in Vietnam during the Covid-19 pandemic, which significantly impacted the airline’s operations.
According to Reuters, FW Aviation, a subsidiary of London-based investment group FitzWalter Capital, sued Vietjet Air in 2022 over four Airbus A321 passenger planes, which had previously been suspended from operations in Vietnam.
FW Aviation argued that Vietjet was liable under the aircraft leasing contract, which was terminated because the low-cost airline did not pay the lease after flights were restricted during the COVID-19 pandemic.
Vietjet's lawyer said FW Aviation had recalled four planes, and said that forcing the airline to return the plane and pay for it would be equivalent to "double the penalty".
But London's High Court has declared Vietjet owes FW Aviation $181.8 million, the latest ruling in a dispute that is being heard in courts in London, Hanoi and Singapore.
Last year, Vietjet was accepted to appeal an earlier High Court ruling on the airline's liability to FW Aviation, and the trial will be conducted next month.
Airlines globally are managing lease obligations and financial recovery efforts. The outcome of VietJet's appeal could influence future disputes and airline financial strategies, potentially impacting sector policies worldwide.
A Vietjet spokesperson said in a statement to Reuters:
"The airline has consistently fulfilled its financial obligations to the dozens of banks and aircraft lessors that have supported its fleet of hundreds of aircraft." The dispute involving the four aircraft is the only one."
As per Vietjet Air, the ruling is not final and would thay would appeal against it.
"On April 17, 2025, Vietjet received a ruling from the British Commercial Court on determining the damage of the aircraft dispute. This is part of the July 31, 2024 judgment that the company has appealed, and this appeal will be heard in the upcoming trial by the Court of Appeal of the United Kingdom.
"On October 2, 2024, the company was accepted by the British court for the appeal on all 5 grounds submitted by Vietjet, including allegations of invalid termination of the lease contract; Banks that sell invalid debts to buyers who are not financial institutions. The appeal of the judgment on July 31, 2024 will take place in May 2025 and the company believes that justice will win and bring fairness to the company."
Vietnam's low-cost airline also said that it was "one of the very few airlines that did not send off employees. At the same time, the airline always fulfills its financial obligations" with banks and aircraft leasing houses.
Previously, in July 2024, the British High Court ruled that low-cost airline Vietjet lost a commercial dispute with UK-based aircraft leasing company FitzWalter Aviation, facing $180 million in compensation as well as the return of four aircraft.
The dispute has been going on for a long time in courts in London, Singapore and Hanoi since FitzWalter Aviation (FWA) filed a lawsuit against Vietjet for leasing four Airbus planes but repeatedly delayed payments in 2021.
At that time, Vietjet's media representative said that the airline affirmed that it would appeal and trust the British court system, and "be sure that justice will prevail and the final decision will be fair for the airline in the trial scheduled for 2025".
Specifically, after a two-week trial in June 2024, Judge Simon Picken of the British High Court on July 31, 2024 ruled in favor of the FWA lessor, saying that Vietjet's unpaid debts were
"of great and long-term value", and that "Vietjet was able to fulfill its obligations but chose not to do so despite knowing what would be if you don't pay."
Judge Picken said Vietjet "orchestrated and conducted a campaign in Vietnam to intervene" in FWA's aircraft recall efforts for years.
The Court's ruling stated that efforts to obstruct the recall of Vietjet's plane, the airline of billionaire Nguyen Thi Phuong Thao, were clearly shown in a letter to the Ministry of Transport dated October 10, 2023, when the low-cost airline "mobilized" government agencies to obstruct the removal of the plane from Vietnam.
In addition, Judge Picken also pointed out the "unusual" time that Silva Star, a minority shareholder of Vietjet headed by Vietjet General Director Dinh Viet Phuong, sought to ask the authorities to prevent the plane from leaving Vietnam.
The airline said it disagreed with the conclusion that the lessor "suddenly invalidly terminated its stable, long-term loan and hire-purchase contracts, just at the height of the pandemic", citing that the airline had carried out flights to take people out of the epicenter of the epidemic and support the supply of necessities. medical equipment.
The statement reads:
"Banks showing signs of dishonesty in debt sale procedures, colluding with debt buyers are also former bank officials. Banks have sold debts to FWA – unqualified lenders/financial investors and disposed of collateral as aircraft without transparent auction, affecting the interests of borrowers."
The low-cost airline continued to "oppose all allegations made by the FWA", "including allegations of obstructing the ownership or export of aircraft".
"The airline has the financial capacity, has repeatedly offered to continue to pay rent or buy back aircraft, especially to serve the needs of passengers during and after the Covid-19 pandemic, but FWA does not cooperate," Vietjet's statement to the BBC .
Following the court's July 31 ruling on the "difficult and complicated" case, The Australian Financial Review described Ben Brazil, the co-founder of FWA, as appearing in a winner's pose as he walked out of court.
Regarding the continued use of aircraft in 2022, a representative of Vietjet said that the airline has made flights to meet the urgent travel needs of people after the peak of the COVID-19 pandemic.
"The airline insists that leaving the four planes inactive is a waste of social resources, while the airline has maintained and maintained the aircraft in good condition at its own expense."
The financial health of the aviation sector is a key concern for investors. Situations like VietJet's may lead investment firms and stakeholders to reassess risk concerning airline investments.
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