SpiceJet shares soar as airline signs pact with aircraft financier to settle Rs 755 crore dues
The settlement will lead to savings to the tune of $68.3 million (Rs 567 crore) for the airline, SpiceJet said.
SpiceJet said on Tuesday that it had reached a settlement with Export Development Canada (EDC), Canada's export credit agency, to resolve liabilities worth $90.8 million (Rs 755 crore). The stock of SpiceJet gained by Rs 3.9, or 2.3 per cent, to end at Rs 61.1 apiece on BSE after the news. The settlement would lead to savings to the tune of $68.3 million (Rs 567 crore) for the airline, SpiceJet said.
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, it 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," said Ajay Singh, Chairman and Managing Director of SpiceJet.
The development was the latest in a series of measures undertaken by the private sector airline to restructure its finances and further strengthen its balance sheet.
The airline said it would pay a comprehensive settlement amount to resolve the outstanding liabilities as per its books of accounts.
As part of the deal, SpiceJet would 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," the airline said in a statement.
The settlement not only eases a substantial amount of financial burden for the airline but also lays the groundwork for a fortified balance sheet and substantial savings for it, SpiceJet said.
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, it added.
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