Shares of low-cost carrier SpiceJet gained over 5% after it reached a major settlement agreement with Export and Development Canada (EDC). The agreement will allow the airline to address significant liabilities, resulting in a substantial improvement of its balance sheet.
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It may be noted that the settlement agreement represents a major milestone in SpiceJet’s ongoing financial restructuring efforts. SpiceJet shares were trading 6.35% higher at Rs 62.48 apiece on the Bombay Stock Exchange (BSE) at 1.28 pm.
As per the terms of the agreement, SpiceJet will assume complete ownership of 13 Q400 aircraft financed by Export Development Canada (EDC). This acquisition will enhance the airline’s operational capacity and fleet management.
The agreement represents a crucial step forward in SpiceJet’s journey toward financial stability, underscoring its dedication to responsible financial practices and sustained growth.
As part of the agreement, SpiceJet will make a comprehensive settlement payment to address outstanding liabilities totalling approximately $91 million or Rs 755 crore, based on SpiceJet’s financial records.
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It will not only relieve SpiceJet of a significant financial obligation but also set the stage for a strengthened balance sheet and considerable cost savings for the airline.
Ajay Singh, Chairman and Managing Director of SpiceJet, said, “We are pleased to have reached this settlement agreement with EDC and we thank their leadership and management team for their cooperation, understanding and progressive approach through the process. This significant milestone will allow us to strengthen our balance sheet and position the airline for long-term success.”
It is worth mentioning that the liabilities originate from a loan taken by the airline in 2011 to acquire 15 aircraft. Currently, twelve of these Q400s are grounded.
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Their refurbishment and return to service will enable SpiceJet to quickly initiate flights on various regional and UDAN routes, said the airline in its press release.
