Virgin Australia Regional Airlines battles US spare parts provider JetPro International

Virgin Australia’s administration is not the only drama facing the carrier, with a bizarre court case being played out in the US.

A Virgin Australia A320. Picture: Supplied.

As Virgin Australia strives to emerge from administration, its regional arm has filed action in a US court after allegedly being duped into buying an aircraft engine missing key parts.

Documents filed in the Southern District Court of New York on Friday, laid out the bizarre case between Virgin Australia Regional Airlines and spare parts provider JetPro International.

The complaint by VARA revealed the airline paid $4m to the Phoenix-based company in 2018 for an A320 engine previously used by Mexicana Airlines.

Under the terms of the contract, the engine had to be delivered in “full quick engine change” configuration so the A320 could be returned to operation quickly.

But a spreadsheet of parts revealed the necessary materials had not been fitted, and over the course of a week VARA sought from JetPro assurances the missing items were added.

Unable to conduct their own physical inspection of the engine until it arrived in Melbourne, VARA accepted JetPro’s assurances the parts had been installed, and executed the acceptance certificate.

It was only when the engine was shipped to Melbourne on September 1, 2018, that VARA discovered the engine was not configured according to the terms of the contract.

“Numerous necessary parts and components had not been installed or delivered and were missing from the engine entirely,” said the court documents.

“Nonetheless, VARA gave JetPro the opportunity to cure its breach, requesting that JetPro immediately ship the missing parts and accessories to VARA so that the engine could be put into functional condition and installed onto aircraft.”

JetPro eventually responded, claiming they could procure the missing parts for $104,000 but they never arrived.

Instead VARA was forced to find its own parts for the engine, at its own cost.

“As a result of JetPro’s actions, Plaintiff VARA has sustained damages in the amount of $1.1m,” said the documents.

Additional costs to cover legal fees and punitive damages were also being sought with the total amount to be “determined at trial”.

As well as contractual breaches, VARA accused JetPro of “fraudulently inducing” the carrier to execute an acceptance certificate.

The case is one of several running in parallel to the administration of Virgin Australia, which collapsed with debts of $6.8bn in April.

Two months later, administrators Deloitte struck a deal with US private equity firm Bain Capital to buy the embattled airline, with the agreement going to a second meeting of creditors on September 4.

On Tuesday, August 25, the administrators will release their 150-plus page report to creditors containing details of the deal with Bain, and the estimated return to creditors.