SpiceJet reaches settlement for ₹755-cr liabilities with EDC, shares up 7%

Shares of SpiceJet jumped as much as 7.2% on Tuesday after the company announced that it has signed a settlement agreement with Export Development Canada (EDC). According to an exchange filing, the low-cost carrier has settled liabilities worth ₹755 crore.

The airline said that the settlement will generate savings of ₹567 crore. The stock closed at ₹61.05, up 3.93%, on the BSE. Intraday, the scrip reported a high of ₹63, reflecting a gain of 7.2%.

As part of the settlement, the airline will pay a comprehensive settlement amount of ₹755 crore. "This settlement marks the biggest breakthrough in SpiceJet's financial restructuring efforts to date," the company said.

Under the deal, SpiceJet will acquire ownership of 12 EDC-financed Q400 aircraft. "This pivotal agreement marks a significant milestone in SpiceJet's pursuit of financial stability, demonstrating its commitment to prudent financial management and long-term prosperity," it said.

The liabilities arise from a loan acquired by SpiceJet in 2011 for procuring 15 aircraft. With 12 of the 15 Q400s currently grounded, their refurbishment and return to service will enable the airline to launch flights on regional and UDAN routes.

Commenting on the development, Ajay Singh, Chairman and Managing Director of SpiceJet, 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”.

Recently, the airline had settled a dispute worth Rs 413 crore ($49.8 million) with Echelon Ireland Madison. It also settled ₹93 crore with aircraft leasing firm Cross Ocean Partners.

In February, SpiceJet had settled a dispute worth ₹250 with Celestial Aviation.