SpiceJet To Resolve $90.8 Million Liabilities with EDC Settlement

On March 26, 2024, SpiceJet informed in a stock exchange filing that the company signed a settlement agreement with Export Development Canada (EDC) to clear major liabilities, leading to a comprehensive revitalisation of its balance sheet. The airline stated that this settlement is considered the biggest breakthrough in its financial restructuring efforts to date.

Details of the Settlement

Spicejet stated in the exchange filing that under the agreement’s terms, the company will acquire full ownership of 13 EDC-financed Q400 aircraft, strengthening the airline’s operational capabilities and fleet management. This key agreement marks a noteworthy milestone in its pursuit of financial stability, demonstrating its commitment to prudent financial management and long-term prosperity.

The company stated, “As part of the settlement, SpiceJet will pay a comprehensive settlement amount to resolve outstanding liabilities amounting to close to $91 million (₹755 crore) as per SpiceJet’s books of accounts. This settlement not only alleviates SpiceJet of a substantial financial burden but also lays the groundwork for a fortified balance sheet and substantial savings for the airline.”

Regarding the settlement, the Chairman and Managing Director of SpiceJet, Ajay Singh, 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.”

The low-cost airline company further stated that the liabilities stem from a loan acquired by the airline in 2011 to procure 15 aircraft. With 12 of these Q400s currently grounded, their refurbishment and subsequent return to service will enable them to launch flights on numerous regional and UDAN routes promptly.

As per the company, this settlement is expected to generate savings of $68.3 million, which is about ₹567 crore.

On March 26, 2024, the share price of SpiceJet Ltd opened at ₹58.58, touching the day’s high at ₹62.50, as of 1:49 PM on the BSE.

About SpiceJet Ltd

SpiceJet is primarily involved in the business of offering air transport services for the carriage of passengers and cargo.

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