This Airline Shares Surge On Rs 755 Crore Settlement With Lessor; To Own 13 Bombardier Planes

SpiceJet Ltd, the private Indian airline, announced a settlement with Export Development Canada (EDC) on March 26. This landmark agreement hailed as the 'biggest breakthrough in SpiceJet's financial restructuring efforts', has propelled the airline's shares on the Bombay Stock Exchange (BSE) and marks an important moment in its journey toward stability and growth.

The settlement, amounting to Rs 755 crore, is expected to yield substantial benefits for SpiceJet, generating savings of Rs 567 crore. The announcement sparked a surge in SpiceJet's share price.

Under the terms of the agreement, SpiceJet will assume full ownership of 13 Q400 aircraft financed by EDC. This acquisition is poised to fortify the airline's operational capabilities and fleet management, setting the stage for enhanced efficiency and service delivery.

In a statement, SpiceJet emphasized the significance of the settlement, highlighting its role in alleviating substantial financial burdens and laying the groundwork for a fortified balance sheet. Ajay Singh, Chairman and Managing Director of SpiceJet, expressed gratitude for the cooperation and progressive approach demonstrated by EDC throughout the negotiation process.

The liabilities addressed in the settlement stemmed from a loan obtained by SpiceJet in 2011 for the procurement of 15 aircraft, with twelve of these Q400s currently grounded. The refurbishment and subsequent return to service of these aircraft are poised to enable SpiceJet to swiftly expand its flight operations, particularly on regional and UDAN routes.

SpiceJet's proactive approach to resolving outstanding liabilities has been evident in recent months, with the airline reaching settlements with multiple lessors, including Aercap, the world's largest aircraft lessor.

The agreement with EDC represents a significant milestone for SpiceJet, heralding immense long-term savings and liberating the airline from the obligation of regular monthly rentals for the acquired aircraft. This development reaffirms SpiceJet's resilience and determination to overcome financial challenges and emerge as a stronger player in the Indian aviation sector.

As of March, SpiceJet boasted an operational fleet of 39 aircraft, predominantly comprising Boeing 737s alongside a few Bombardier Q400 jets. With complete ownership of the Q400 jets secured through the settlement, SpiceJet is poised to expand its route network and launch new flights on regional routes, catering to diverse passenger needs.

Notably, Bombardier, the manufacturer of the Q400 jets, is a Canada-based firm, further underscoring the international dimension of the settlement between SpiceJet and EDC.

The positive impact of the settlement was reflected in SpiceJet's share performance, with shares concluding Tuesday's trading session with gains of nearly 4% at Rs 61.06 per share on the Bombay Stock Exchange (BSE).