SpiceJet settles Rs 755 crore liabilities with aircraft lessor EDC

This will allow airline to own 13 of the 15 Bombardier Q400 aircraft financed by the Canadian agency

SpiceJet on Tuesday said it had signed an agreement with aircraft lessor Export Development Canada (EDC) to settle liabilities worth Rs 755 crore.

This pact will allow the airline to take ownership of 13 of the 15 Bombardier Q400 aircraft financed by EDC.

“This settlement marks the biggest breakthrough in SpiceJet’s financial restructuring efforts to date,” it stated.

SpiceJet has been facing a cash crunch for the past few quarters. It is also dealing with multiple court cases regarding money owed to former owner Kalanithi Maran, financial services firm Credit Suisse, aircraft lessors and engine lessors.

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In the last two months, the airline has settled matters with three aircraft lessors — Echelon Ireland Madison One, Cross Ocean Partners and Celestial Aviation.

“These settlements with the key aircraft lessors have also resulted in savings of Rs 685 crore for the airline,” the carrier added.

The airline said its 12 Q400 planes are currently grounded, and this settlement will allow it to bring them back into service.

The settlement with EDC will enable the airline to save Rs 567 crore, it added.

Aviation consultancy firm CAPA India had in December stated that SpiceJet's resurgence, once the new funding is in place, has the potential to disrupt the Indian aviation market in 2024. This is because the airline will bring its grounded aircraft back into service and lease a slew of planes to be competitively relevant.

On January 11, the beleaguered airline's shareholders approved raising Rs 2,241.5 crore through equity and warrants — Rs 1,591.5 crore by issuing equity shares to 58 entities and Rs 650 crore via warrants on a preferential basis to five other entities.

On January 26, the first tranche of Rs 744 crore was infused into the airline. SpiceJet, on February 22, raised a second tranche of Rs 316 crore under the preferential issue of equity shares and warrants.

Earlier this month, SpiceJet had stated that it plans to lease 10 aircraft to augment capacity during summer. In the aviation sector, the summer schedule begins on the last Sunday of March and ends on the last Sunday of October.