The High Court of Justice in London has sided with Chinese lessor CALC and ordered Air India (AI, Delhi International) to pay around GBP13.4 million pounds (USD18.1 million) for allegedly failing to meet lease and maintenance payments.

In a ruling transmitted virtually to a commercial court in New Delhi on December 11, judge Simon Salzedo in London took note of the aviation crisis and allowed the airline a payment deadline of January 11 instead of demanding an immediate outlay, provided that it pays USD5 million of the total sum by December 31, the financial daily Mint reported.

The lessor sued the debt-laden flag carrier for failing to pay dues on five A320-200s delivered in 2015. Salzedo delivered a strong rebuke to Air India for “unsatisfactory and discourteous” conduct by not engaging with the legal process in a timely manner.

Air India’s current fleet of 124 aircraft includes nine A320ceo, the ch-aviation fleets module shows, five of which emanate from CALC on a 12-year lease. It is not clear exactly when it stopped paying the lease fees, but the ruling indicated non-payment this year due to Covid-related financial issues.

The counsel for CALC had sought immediate payment, arguing that as a state-owned carrier Air India could obtain the funds from the Indian government.

Air India countered that it did not dispute the payments, but while it had managed to renegotiate lease payment schedules with other lessors, talks with CALC had been unproductive. It had asked the court for a payment deadline of January 29 to avoid disruptions to its UK and Europe operations over the Christmas and New Year period.

In related news, Air India has been preparing to raise a further INR10 billion rupees (USD136 million) to complete fundraising of about INR61.5 billion (USD836 million) in short-term loans from local lenders, two unnamed sources told Mint.

As previously reported, the proceeds of the government-guaranteed loans will be used to refinance comparatively expensive foreign-currency bridge loans taken to buy six B787-8s and one B777-300(ER). An initial tender document aimed at domestic lenders was released on November 11.

“The airline has completed raising six of the seven tranches, with the last remaining tranche expected to be completed in the coming week,” one of the sources told the newspaper on December 7. “The exercise is being carried out to retire high-cost debt.”

Air India has offered B787s, B777s, and other aircraft as collateral for the loans, which will be repaid after one year. It currently operates twenty-seven B787-8s, at least six of which are owned, and thirteen B777-300(ER)s, all of which are owned. It also operates three owned B777-200(LR)s.

ch-aviation has asked Air India and CALC for comment.