SpiceJet has signed a pact with Export Development Canada (EDC) to settle liabilities worth $90.8 million (Rs 755 crore), prompting a sharp uptick in its share price on the BSE.
The agreement is being termed by the airline as the ‘biggest breakthrough in SpiceJet’s financial restructuring efforts”.
The liabilities stem from a loan taken by the airline in 2011 to procure 15 aircraft.
The terms of the settlement pact will allow the airline to clear major liabilities, leading to a comprehensive revitalisation of the airline’s balance sheet, SpiceJet said in a statement.
Under the agreement, SpiceJet will acquire full ownership of 13 EDC-financed Q400 aircraft, bolstering the airline’s operational capabilities and fleet management, it said.
SpiceJet will pay a comprehensive settlement amount to resolve outstanding liabilities amounting to close to $91 million, the airline said.
This settlement will lead to savings worth $68.3 million (Rs 567 crore) for SpiceJet, it said.
“We have reached this settlement agreement with EDC. This significant milestone will allow us to strengthen our balance sheet,” Ajay Singh, chairman and managing director of SpiceJet, said.
With 12 of the Q400s grounded, their refurbishment and subsequent return to service will enable SpiceJet to promptly launch flights on numerous regional routes, the airline said. It also said the agreement would result in long-term savings, liberating the airline from the obligation of regular monthly rentals for these aircraft, it added.
SpiceJet has over the last few months reached settlements with multiple lessors, including Aercap, the world’s largest aircraft lessor, as the company looks to restore its grounded fleet and return to full capacity.
The settlement is also the latest in a series of cost-saving exercises at the cash-strapped airline. Last month, it cut jobs saying it would save $12 million annually.
The shares of SpiceJet on Tuesday jumped 4 per cent after the deal. The stock climbed 3.93 per cent to settle at Rs 61.06 apiece on the BSE. During the day, it jumped 7.23 per cent to Rs 63. In terms of volume, 93.12 lakh shares of the company were traded on the BSE during the day.
SpiceJet did not immediately respond to a request for comment.
