SpiceJet and Export Development Canada (EDC) have finalized a settlement agreement that will enable the airline to resolve significant liabilities, leading to a comprehensive overhaul of its balance sheet. This agreement stands as the most significant breakthrough in SpiceJet’s ongoing financial restructuring efforts. As per the terms, SpiceJet will gain complete ownership of 13 Q400 aircraft financed by EDC, enhancing its operational capabilities and fleet management. This landmark agreement signifies a major milestone in SpiceJet’s journey toward financial stability, showcasing its dedication to prudent financial management and sustained growth.
As part of the settlement, SpiceJet will make a comprehensive payment to settle outstanding liabilities amounting to nearly $91 million according to SpiceJet’s records. This settlement not only relieves SpiceJet of a substantial financial burden but also sets the stage for a strengthened balance sheet and significant cost savings.
Ajay Singh, Chairman and Managing Director of SpiceJet, expressed satisfaction with the settlement agreement, thanking EDC’s leadership and management team for their cooperation and forward-thinking approach throughout the process. He highlighted the significance of this milestone in fortifying SpiceJet’s financial position for long-term success.
The liabilities originated from a loan obtained by the airline in 2011 for the acquisition of 15 aircraft. With twelve of these Q400s currently grounded, their refurbishment and subsequent return to service will enable SpiceJet to swiftly initiate flights on various regional and UDAN routes. This agreement promises substantial long-term savings for SpiceJet, freeing the airline from the obligation of regular monthly rentals for these aircraft.
The pact with EDC represents a significant boost for SpiceJet, reaffirming its resilience and determination to overcome financial hurdles and emerge as a much stronger entity in the Indian aviation sector.