Why was VietJet taken to court in the UK?

The UK case stemmed from VietJet’s failure to return four aircraft after lease agreements were terminated in late 2021. The lessor, Fitzwalter Aviation Holdings, claimed the airline continued to operate the planes without payment, prompting legal action.

What did the court decide?

The court found largely in favour of Fitzwalter, ruling that the lease terminations were lawful and rejecting VietJet’s arguments for lease extension and relief from forfeiture. It also criticised VietJet’s post-termination conduct as grounds to deny further relief.

How did VietJet respond to the ruling?

VietJet issued a disclosure to investors stating it would appeal the decision, alleging bad-faith conduct by Fitzwalter and its affiliates. It also said the ruling would not affect its operational or financial stability.

What are the financial implications for VietJet?

While the court did not specify a damage figure, Fitzwalter was reportedly seeking US$275 million plus additional costs. VietJet’s stock declined by roughly 5 percent after the ruling, and foreign investors net-sold over US$39 million in shares shortly afterward.

What is the broader significance of this case?

The case has raised questions about Vietnam’s adherence to international leasing standards. The Aviation Working Group added Vietnam to a watchlist under the Cape Town Convention, potentially impacting the cost of capital for Vietnamese airlines.

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August 9, 2024

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