SpiceJet on Thursday said that it has reached an agreement with aircraft leasing company Genesis Aircraft Services to resolve a $16-million dispute.
Under the settlement, SpiceJet will pay Genesis $6 million and Genesis will acquire equity worth $4 million in SpiceJet, at a price of Rs 100 per share, which is 78% higher than the previous closing price.
This agreement is part of the SpiceJet's strategy to restore financial stability and reduce legal liabilities, resulting in significant savings as the airline aims for long-term growth. The stock market reflected this ease, with shares rising 9.08% after the announcements, to close at Rs 61.39 apiece.
“This agreement, which includes Genesis acquiring an equity stake in SpiceJet, will significantly reduce our financial liabilities and further strengthen our balance sheet," said Ajay Singh, chairman and managing director of SpiceJet.
Both parties will withdraw all ongoing litigations related to this matter, contingent on fulfilling the settlement terms. This resolution follows successful agreements with other lessors, including Horizon Aviation, Engine Lease Finance Corporation, Aircastle, Wilmington Trust SP, Shannon Engine Support Ltd., and Export Development Canada.
In September, Carlyle Aviation agreed to convert $30 million of lease arrears into SpiceJet equity at Rs 100 per share. The airline, in a statement, said that this development signals increasing confidence from stakeholders in its financial and operational recovery. The airline's recent financial progress has also been recognised by Acuité Ratings & Research Ltd., which recently upgraded SpiceJet's credit rating by four notches.
These developments come after SpiceJet raised Rs 3,000 crore through a qualified institutional placement and has since been clearing claims.
However, earlier this week, the Delhi High Court issued summons to the CEO and COO for defaulting on lessor payments. Incidentally, both the CEO and the COO positions at SpiceJet are lying vacant as of now. Also, the court has now expressed “shock” at SpiceJet removing parts from planes that were returned to the lessor. On Dec 17, the HC heard a contempt plea filed by lessors TWC Aviation that claims while engines and planes were returned by the airline, several parts were removed from the airframes.
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