SpiceJet has announced that it has fully settled a $90.8 million (INR 763 Crore) dispute with Export Development Canada (EDC) for a total of $22.5 million, now paid in full by the airline. This resolution marks a significant milestone for SpiceJet, resulting in a substantial saving of $68.3 million (INR 574 crore).
The agreement represents one of the largest settlements in SpiceJet’s history, strengthening the airline’s fiscal position, eliminating a significant liability from its balance sheet and paving the way for sustained growth and operational efficiency.
Ajay Singh, Chairman and Managing Director, SpiceJet said, “We are very pleased to have paid the settlement amount in full and closed this agreement with EDC. This resolution allows us to move forward with a strengthened balance sheet and focus on getting our Q400 aircraft back into service as quickly as possible. We are excited to expand our regional operations and enhance connectivity across key routes, including those under the UDAN scheme, with our revitalised fleet.”
As per the terms of the agreement, SpiceJet has acquired full ownership of 13 EDC-financed Q400 aircraft. The transfer of ownership of these 13 planes will result in a substantial reduction in operational costs, strengthening the airline’s operational capabilities and fleet management. It also brings long-term financial benefits, relieving SpiceJet from the obligation of monthly rental payments for these aircraft and further reinforcing the airline’s financial stability.
Q400 Powers SpiceJet’s Regional Growth
These aircraft will also enable SpiceJet to launch additional flights on regional and UDAN routes. Starting October 27, 2024, the airline has begun operating several new routes using the Q400, including Delhi-Amritsar-Delhi, Guwahati-Patna-Guwahati, Kolkata-Patna-Kolkata, Delhi-Patna-Delhi, and Delhi-Darbhanga-Delhi. Recently, SpiceJet also introduced services on the Shivamogga-Chennai, Shivamogga-Hyderabad, and Chennai-Kochi sectors with the same aircraft. SpiceJet plans to roll out another 18 flights in phases as more Q400 aircraft return to service.
SpiceJet’s cup of woes
Last month, the budget carrier faced a new insolvency case in the National Company Law Tribunal (NCLT), filed by aircraft lessor Aviator ML 29641 Ltd over unpaid rental dues of around ₹58 crore.
The National Company Law Tribunal (NCLT), which heard the plea on Monday, refused to issue the notice to SpiceJet, citing the absence of the airline’s response to the demand notice in the lessor’s petition. The tribunal gave it time to submit the reply regarding the demand notice, with the next hearing scheduled for 11 November.
According to the lessor’s plea, the default arose from a lease agreement dated 16 June, 2017, for a Boeing 737 aircraft. The petition stated that as of 29 June, 2024, the outstanding amount is approximately $7.3 million, equivalent to ₹58 crore.
According to a Mint report, the parties that have filed various insolvency cases against SpiceJet include Wilmington Trust SP Services (Dublin), Willis Lease Finance, Celestial Aviation, Aircastle, and Alterna Aircraft. Additionally, three entities—AWAS 36698 Ireland, AWAS 36694 Ireland, and AWAS 36695—along with Shannon Engine Support Limited, Engine Lease Finance B.V., Raymach Technologies Pvt. Ltd., and software solutions startup Techjockey Infotech Pvt. Ltd. have also filed cases.