Airline Stock Under Rs 60 in Green After Company Pays USD 22.5 Million to Resolve USD 90.8 Million EDC Dispute, Saves USD 68.3 Million
The stock is up by 49.5 per cent from its 52-week low of Rs 37.53 per share.
SpiceJet Ltd today announced that it has fully settled a USD 90.8 million (Rs 763 crore) dispute with Export Development Canada (EDC) for a total of USD 22.5 million, now paid in full by the airline. This resolution marks a significant milestone for SpiceJet, resulting in a substantial saving of USD 68.3 million (Rs 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.
Ownership of 13 Q400 will reduce operational costs: 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.
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.”
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About the Company
Today, shares of SpiceJet Ltd surged 4.6 per cent to an intraday high of Rs 56.09 per share from its previous closing of Rs 53.63 per share. The stock is up by 49.5 per cent from its 52-week low of Rs 37.53 per share.
SpiceJet is India's favourite airline that has made flying affordable for more Indians than ever before. SpiceJet is an IATA-IOSA certified airline that operates a fleet of Boeing 737s & Q-400s and is one of the country's largest regional players operating multiple daily flights under UDAN or the Regional Connectivity Scheme. The majority of the airline's fleet offers SpiceMax, the most spacious economy-class seating in India.
According to Quarterly Results, the company reported net sales of Rs 1,708 crore, operating profit of Rs 49 crore and net profit of Rs 158 crore in Q1FY25. In its annual results, the company reported net sales of Rs 7,085 crore, an operating loss of Rs 644 and a net loss of Rs 424 crore in FY24.
The company has a market cap of over Rs 7,000 crore. According to the shareholding pattern of September 2024, FIIs bought 27,86,70,546 shares or a 21.06 per cent stake and increased their stake to 22.87 per cent compared to 1.81 per cent in June 2024. Investors should keep an eye on this Small-Cap stock.
Disclaimer: The article is for informational purposes only and not investment advice.