Vietjet's $250m Lease Fight Shows Why Lessors Never Forget an Unpaid Plane

Airlines are used to fighting over slots, fuel and fares. Vietjet is now fighting over something more basic: whether it has to pay for planes it already flew.

On October 16, the Commercial Court in London granted a worldwide freezing order against the assets of Vietjet Aviation, the publicly listed Vietnamese low-cost carrier, according to Blackstone Chambers, whose barrister led the case for the creditor. The order covers roughly US$250 million that Vietjet owes under a string of English judgments. The Australian Financial Review reports that the figure is about A$359 million.

How a rent dispute became a $250m problem

The story starts in the pandemic. According to an earlier judgment in the case, Vietjet, like many airlines, missed rental payments on four leased Airbus A321 aircraft after Covid-19 hit. Other airlines renegotiated their leases. Vietjet did not manage to. The leases were terminated in October 2021.

The creditor is FW Aviation, part of FitzWalter Capital, a London distressed-debt firm run by former Macquarie banker Ben Brazil. According to that judgment, a FitzWalter entity bought the outstanding loans on the aircraft from the original lenders in October 2021. The AFR describes the four jets as having been used by the airline for a year without payment.

Since then the English courts have ruled against Vietjet on liability and on most of the money. The judgment records about US$165 million in liquidated damages plus interest, around US$17 million in extra rent at 150% of the contractual rate on some of the jets, and US$11.3 million in accrued unpaid rent. Interest has kept running.

Why the court froze everything

A freezing order after judgment is not routine. The court has to be persuaded there is a real risk the debtor will move assets out of reach.

Here, according to Blackstone Chambers, Justice Saini found exactly that. He pointed to recent transactions in which Vietjet appeared to have transferred essentially all the value of its order book for future aircraft to an associated party, for consideration he called “illusory”. The AFR’s headline adds that the judge questioned a Cayman Islands set-up.

Earlier this month, the AFR reported, the same court said FitzWalter could appoint receivers over Vietjet assets. The freezing order now stops the airline from dealing with its assets around the world while that enforcement plays out.

What it means for Vietjet’s expansion

Timing is awkward. The AFR reports that Vietjet has been planning to expand into the Australian domestic market, and that this ruling deals that plan a blow. It is hard to launch an airline in a new country when a London court has told you not to move your money.

For everyone else in aviation, the lesson is old but worth repeating. Aircraft lessors and the funds that buy distressed aviation debt are patient, well-advised and willing to chase a debtor through several countries. A pandemic-era shortfall that might have been settled for a discount in 2021 has instead grown into a nine-figure judgment, a receivership fight and a worldwide freeze.

Vietjet can still appeal or settle, and nothing in the order decides the airline’s wider finances. But the message from London is clear: if you fly the plane, someone will eventually send the bill.