SpiceJet Enters Settlement With EDC For Rs 755 Crore, Share Price Surges 3 Per Cent

The settlement deal led to an increase in the stock prices of the carrier, which climbed almost 3 per cent to touch Rs 61.60 apiece on the BSE

The agreement will see SpiceJet take full ownership of the 13 EDC-financed Q400 aircraft.

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SpiceJet Ltd announced on Tuesday that it has entered a settlement with Export Development Canada(EDC) to settle liabilities worth Rs 755 crore. The airline labelled the agreement as the ‘biggest breakthrough in SpiceJet’s financial restructuring efforts’. 

The settlement deal led to an increase in the stock prices of the carrier, which climbed almost 3 per cent to touch Rs 61.60 apiece on the BSE. The deal will help the airline generate savings of up to Rs 567 crore, reported Moneycontrol.

The agreement will see SpiceJet take full ownership of the 13 EDC-financed Q400 aircraft. The carrier issued a statement and said, “Under the agreement's terms, SpiceJet will acquire full ownership of 13 EDC-financed Q400 aircraft, bolstering the airline's operational capabilities and fleet management. 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.”

Commenting on the deal, Ajay Singh, Chairman and MD, 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.”

The airline has also made settlements with several lessors in the recent months, including the deal with Aercap, as the carrier tries to return to full capacity.

"This agreement heralds immense long-term savings for SpiceJet, liberating the airline from the obligation of regular monthly rentals for these aircraft. The accord with EDC represents a substantial boost for SpiceJet, reaffirming its resilience and determination to surmount financial challenges and emerge as a vastly stronger entity in the Indian aviation landscape," the airline added.

The liabilities emerged from a loan acquired by the carrier earlier in 2011 to procure 15 aircraft.