SpiceJet seals settlement deal with EDC to resolve Rs 755-cr liabilities, stock surges

SpiceJet and Export Development Canada (EDC) have signed a settlement agreement, the terms of which will allow the airline to clear major liabilities, leading to a comprehensive revitalisation of its balance sheet. As part of the settlement, SpiceJet will pay a comprehensive settlement amount to resolve outstanding liabilities amounting to close to Rs 755 crore ($91 million) as per SpiceJet books of accounts.

This settlement marks the biggest breakthrough in SpiceJet’s financial restructuring efforts to date, the airline said in a regulatory filing. The settlement will generate savings to the tune of Rs 567 crore for the airline.

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.

This settlement not only alleviates SpiceJet's substantial financial burden but also lays the groundwork for a fortified balance sheet and substantial savings for the airline.

Following the announcement, shares of SpiceJet were trading at Rs 61.30, up by 4.34%.

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."