On March 26, SpiceJet, a prominent player in the low-cost airline sector, announced a significant settlement with Export Development Canada (EDC), triggering a notable surge in its share price on the Bombay Stock Exchange (BSE). This deal, hailed as the ‘biggest breakthrough in SpiceJet’s financial restructuring efforts’, is poised to yield substantial savings, estimated at Rs 567 crore, for the airline.
The impact of this development was palpable as, by 1315 hours on March 26, SpiceJet’s shares on the BSE surged by 3.5%, reaching Rs 61 apiece. The settlement terms entail SpiceJet assuming complete ownership of 13 EDC-financed Q400 aircraft, a move set to profoundly enhance its operational capabilities and fleet management.
In a statement, SpiceJet expressed its satisfaction with the agreement, recognizing it as a significant milestone in its pursuit of financial stability. Ajay Singh, the Chairman and Managing Director of SpiceJet, conveyed gratitude to EDC’s leadership and management team for their cooperation and progressive approach throughout the process. He emphasized the pivotal role this settlement plays in bolstering the airline’s balance sheet and positioning it for long-term success.
The liabilities in question stem from a loan obtained by SpiceJet in 2011 for the procurement of 15 aircraft. Currently, twelve of these Q400s are grounded. However, with the settlement paving the way for their refurbishment and return to service, SpiceJet anticipates swiftly launching flights on numerous regional and UDAN routes, further strengthening its operational footprint and market competitiveness.
Sources: moneycontrol.com
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