SpiceJet’s share price surged by 7 per cent on October 9, building on gains from the previous session after the airline announced it had reached an amicable settlement with lessors under Babcock & Brown Aircraft Management (BBAM) for $22.5 million. This settlement represents a significant decrease from the original claim of $131.85 million, according to a stock exchange filing from SpiceJet.
By around 10 AM, SpiceJet shares were trading at Rs 66.9, marking a 6.5 per cent increase from the previous close. This agreement is part of the airline’s ongoing efforts to strengthen its financial position and revitalize operations. Ajay Singh, Chairman and Managing Director of SpiceJet, remarked, “This landmark settlement with BBAM significantly reduces our liabilities and reinforces our goal of becoming a more resilient airline.”
Recently, SpiceJet raised Rs 3,000 crore through a Qualified Institutional Placement (QIP), a key step in its financial recovery strategy. In addition to the QIP capital, the airline expects to receive Rs 736 crore from a prior funding round. This influx of funds has allowed SpiceJet to clear outstanding debts, including Rs 71 crore in Goods and Services Tax (GST) dues and Rs 80 crore in salary arrears from June to August 2024.
Earlier this week, SpiceJet announced plans to add 10 new aircraft to its fleet by the end of November, including seven leased planes and three that were previously grounded. Two of the leased aircraft are set to arrive in India and become operational by October 10, with all new planes expected by mid-November. This fleet expansion follows the airline’s successful resolution of a $16.7 million claim from Engine Lease Finance Corporation (ELFC) on September 24, marking another step in overcoming its financial challenges.
Despite facing significant financial hurdles, including Rs 3,700 crore in outstanding dues related to lessor agreements and other liabilities at the time of the QIP fundraising, these recent developments have set the stage for a more stable financial outlook, as reflected in the rising share price. SpiceJet aims to restore its operations to pre-2019 levels when it operated 74 aircraft compared to just 28 currently.
Over the past year, Spicejet’s stocks SpiceJet’s ted over 80 per cent returns, boosting the company’s market capitalization to over Rs 8,000 crore. Following the fleet expansion announcement, the stock experienced a more than 9 per cent increase.
The airline is also focusing on enhancing connectivity and expanding its range of travel options, including exclusive regional and international destinations, as part of its broader growth strategy outlined in a recent investor presentation.