Domestic carrier SpiceJet has signed a settlement agreement with Canada's export credit agency Export Development Canada to resolve ₹755 crore ($91 million) liabilities, which are likely to generate savings of ₹567 crore ($68.3 million), the airline said on March 26.
Under the agreement's terms, SpiceJet will acquire full ownership of 13 EDC-financed Q400 aircraft, the airline said. It added that the settlement marks the biggest breakthrough in the airline’s financial restructuring efforts to date.
The airline said it will pay a comprehensive settlement amount to resolve outstanding liabilities amounting to close to ₹755 crore as per SpiceJet books of accounts.
The liabilities stem from a loan acquired by the airline in 2011 for the procurement of 15 aircraft. With 12 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, the firm said. It added that this agreement liberates it from the obligation of regular monthly rentals for these aircraft.
Ajay Singh, Chairman and Managing Director of SpiceJet, said, "This will allow us to strengthen our balance sheet and position the airline for long-term success."
This is the fourth major resolution for SpiceJet following its recent fundraising.
Separately, earlier this month SpiceJet had announced that it successfully resolved a ₹413 crore dispute with Echelon Ireland Madison One Ltd which will result in savings of ₹398 crore. As part of the agreement, SpiceJet would also acquire two airframes.
On February 28, SpiceJet said it had mutually settled its ₹250 crore dispute with Celestial Aviation which had resulted in savings of ₹235 crore and on March 5, it announced a settlement of ₹93 crore with aircraft leasing firm Cross Ocean Partners.
SpiceJet shares traded 5.5% higher at ₹61.98 on BSE at 1:30 pm.
