SpiceJet shares surge 5% after $90.8 million settlement with EDC; acquires 13 aircrafts
SpiceJet resolves aircraft financing dispute, secures full ownership of 13 Q400 planes, leading to significant savings and operational boost.
Shares of SpiceJet surged over 5 per cent on November 14 after the airline successfully resolved a $90.8 million dispute with Export Development Canada (EDC) for a settlement of $22.5 million (Rs 189 crore).
This agreement resulted in savings of approximately $68.3 million (Rs 574 crore), enhancing the airline's financial position.
With this settlement, SpiceJet gained complete ownership of 13 Q400 aircraft, previously financed by EDC.
The acquisition is expected to reduce operational costs significantly while enabling the airline to deploy additional flights on regional and UDAN (Ude Desh ka Aam Nagrik) routes. The company’s shares spiked to an intraday high of Rs 55.87 on the BSE, up 4.17 per cent, before trading at Rs 55.31, reflecting a gain of 3.13 per cent around noon.
The resolution marks a critical step forward in SpiceJet's financial restructuring efforts. The acquisition of Q400 planes is expected to help the airline quickly resume and expand regional operations, leveraging its existing network and supporting government-led connectivity initiatives.
The airline’s Chairman and Managing Director, Ajay Singh, highlighted the positive impact of the settlement on SpiceJet's balance sheet and operational capabilities. This move is part of the carrier's broader strategy to stabilize its financials and optimize its fleet utilization.
Earlier, SpiceJet had also settled a long-standing dispute with lessors under Babcock & Brown Aircraft Management (BBAM), reducing the original claim of $131.85 million to $22.5 million. The company has been proactive in strengthening its financial health, recently raising Rs 3,000 crore through a Qualified Institutional Placement (QIP). This capital infusion aims to bolster the airline's liquidity and aid in its recovery initiatives amid a challenging operational environment.
With these settlements and strategic moves, SpiceJet appears poised for a turnaround, focusing on enhancing its fleet and streamlining costs, which may help regain investor confidence moving forward.
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01:12 PM IST