Settlement to Generate Savings of $68.3 million (INR 567 Crore) for SpiceJet; Complete Ownership of 13 Q400 Planes Transfers to SpiceJet
FinTech BizNews Service
Mumbai, March 26, 2024: SpiceJet and Export Development Canada (EDC) have signed a settlement agreement, the terms of which will allow the airline to clear major liabilities, leading to a comprehensive revitalization of its balance sheet. This settlement marks the biggest breakthrough in SpiceJet’s financial restructuring efforts to date.
Under the agreement's terms, SpiceJet will acquire full ownership of 13 EDC-financed Q400 aircraft, bolstering the airline's operational capabilities and fleet management. This pivotal agreement marks a significant milestone in SpiceJet's pursuit of financial stability, demonstrating its commitment to prudent financial management and long-term prosperity.
As part of the settlement, SpiceJet will pay a comprehensive settlement amount to resolve outstanding liabilities amounting to close to $91 million as per SpiceJet books of accounts. This settlement not only alleviates SpiceJet of a substantial financial burden but also lays the groundwork for a fortified balance sheet and substantial 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."
The liabilities stem from a loan acquired by the airline in 2011 for the procurement of 15 aircraft. With twelve of these Q400s currently grounded, their refurbishment and subsequent return to service will enable SpiceJet to promptly launch flights on numerous regional and UDAN routes.
This agreement heralds immense long-term savings for SpiceJet, liberating the airline from the obligation of regular monthly rentals for these aircraft.
The accord with EDC represents a substantial boost for SpiceJet, reaffirming its resilience and determination to surmount financial challenges and emerge as a vastly stronger entity in the Indian aviation landscape.
