Fly540 aircraft saved from auction after payment of Sh157m debt

Fly540 airline has settled a Sh157 million debt to save its two aircraft from auction.

A UK-based ACL Aviation Support Limited had instructed a local auctioneer to attach the aircraft and sell them by public auction or private treaty to recover $1,965,418 for breach of a purchase lease agreement.

Fly540 entered into an agreement with ACL on June 19, 2007 to purchase or lease a Dash 8 model aircraft manufactured by a UK firm, Pratt and Whitney, and agreed the contract would be governed and construed in accordance with the English law.

To avoid further litigation, the parties though their lawyers, signed joint consent before Lady Justice Martha Koome on Tuesday last week and agreed to settle the dispute and withdraw the court proceedings.

Apart from paying the outstanding debt, Fly540 also agreed to pay the auctioneers, Westminister Merchants, Sh200,000 to cater for their fees.

Fly540 moved to court after ACL attached its aircraft on August 6 and issued the airline with a seven-day notice to pay up or its two planes be sold by public auction or private treaty.

Before the expiry of the period, Fly540 lawyers flew to Mombasa on August 12 where High Court judges were meeting during the court vacation and secured a temporary injunction restraining ACL from selling the aircraft pending inter-parties hearing on August 24.

But when the parties appeared before Justice Koome on August 24, lawyers Gilbert Mungu for Fly540 and Anjarwalla and Khanna Advocates representing ACL, sought to have the matter settled.