SpiceJet on Tuesday announced that it has signed an agreement with Export Development Canada (EDC) to resolve liabilities worth $90.8 million, which amounts to Rs 755 crore. These liabilities originate from a loan that was taken by the airline in 2011 for the acquisition of 15 aircraft.
The terms of the settlement will enable SpiceJet to clear substantial debts, which in turn is expected to lead to a comprehensive improvement of its balance sheet, as stated in the airline’s press release. Under this arrangement, SpiceJet will gain full ownership of 13 Q400 aircraft financed by EDC, enhancing its operational capacity and fleet management capabilities.
SpiceJet to settle debts
The airline disclosed that it will make a comprehensive payment to settle outstanding liabilities nearing USD 91 million. This resolution is anticipated to generate savings of USD 68.3 million (Rs 567 crore) for SpiceJet. Ajay Singh, Chairman and Managing Director of SpiceJet, commented, “We have finalized this agreement with EDC, marking a significant milestone that will fortify our balance sheet,” reported PTI.
With twelve of the Q400 aircraft currently grounded, their refurbishment and subsequent reintegration into service will facilitate SpiceJet in swiftly launching flights on various regional and UDAN routes, the airline emphasized. Furthermore, it highlighted that this agreement will yield long-term savings for SpiceJet by relieving the airline from the obligation of regular monthly rentals for these aircraft.