SpiceJet has announced that it has paid off a long-standing financial dispute with Export Development Canada, settling a $90.8 million (approximately Rs 763 crore) liability for $22.5 million, saving $68.3 million (Rs 574 crore) for the airline.
This is one of the largest settlements in SpiceJet's history and strengthens its fiscal position by removing a substantial liability from its balance sheet, according to a press release.
“This resolution allows us to move forward with a strengthened balance sheet and focus on getting our Q400 aircraft back into service, as quickly as possible. We are excited to expand our regional operations and enhance connectivity across key routes, including those under the UDAN scheme, with our revitalised fleet," said Ajay Singh, chairman and managing director of SpiceJet.
As part of the agreement, SpiceJet has gained ownership of 13 Q400 aircraft, that were previously financed by EDC. The airline anticipates that owning these planes will lead to substantial reductions in operational costs by eliminating monthly rental expenses, which will further stabilise the airline's financial footing.
The newly acquired Q400 aircraft are expected to fuel SpiceJet's regional growth, particularly on routes under India's UDAN scheme, which aims to improve connectivity to underserved regions.
Since Oct. 27, SpiceJet has introduced new Q400-operated routes, including Delhi-Amritsar-Delhi, Guwahati-Patna-Guwahati, and Delhi-Darbhanga-Delhi. Additionally, the airline has commenced services on sectors such as Shivamogga-Chennai, Shivamogga-Hyderabad, and Chennai-Kochi.
The airline plans to phase in 18 more flights as more Q400 aircraft are brought back into service, enabling further expansion and enhanced connectivity across its regional network.
SpiceJet stock rose as much as 4.18% during the day to Rs 55.87 apiece on the NSE. The stock has risen 44.34% year-to-date and fallen 8.29% over the past 12 months.
One out of the four analysts tracking the low-cost carrier has a 'buy' rating on the stock, two recommend a 'hold' and one suggests a 'sell', according to Bloomberg data. The average of 12-month analysts' price target implies a potential downside of 29.9%.
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