Multibagger airline stock at Rs 63.4 in green as it is set to receive Q400 aircraft from NAC in settlement agreement; ownership of six Q400s transferred to airline!

The stock gave multibagger returns of 180 per cent from its 52-week low of Rs 22.65 per share whereas BSE Small-Cap Index is up by 6s5 per cent in the same period.

SpiceJet Ltd is poised to receive a Q400 aircraft secured from Nordic Aviation Capital (NAC) as part of a settlement agreement inked last year. Under the agreement, it which settles all past liabilities for the Q400s leased by NAC to SpiceJet, the airline acquires full ownership of six Q400s. The airline already has five Q400 aircraft which were earlier owned by NAC. The ownership of these planes has been transferred to SpiceJet. This agreement also heralds immense long-term savings for SpiceJet, liberating the airline from the obligation of regular monthly rentals for these aircraft.

The sixth Q400 aircraft is en route to India from Germany and is expected to arrive in Delhi soon. The timely arrival of the Q400 aircraft aligns with the upcoming summer schedule, enabling the airline to offer seamless connectivity and enhanced services to passengers during peak travel seasons. SpiceJet has recently announced four major settlements with key aircraft lessors, resulting in substantial savings of Rs 1,252 crore for the airline.

On March 26, 2024, SpiceJet announced a significant settlement with Export Development Canada (EDC), securing full ownership of 13 EDC-financed Q400 aircraft. This comprehensive agreement resolved liabilities amounting to nearly USD 91 million, as per SpiceJet's records, leading to substantial savings of Rs 567 crore for the airline. In addition to the EDC settlement, SpiceJet finalized three other noteworthy agreements, including those with aircraft leasing firms, Cross Ocean Partners and AerCap. These settlements collectively yielded savings of INR 685 Crore for the airline. Moreover, SpiceJet acquired three Boeing aircraft as part of these agreements.

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 & freighters and is the country’s largest regional player 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.

Today, shares of SpiceJet Ltd surged 3 per cent to Rs 63.40 from its previous closing of Rs 61.55 per share with an intraday high of Rs 63.40 and an intraday low of Rs 61. The stock’s 52-week high is Rs 77.50 and its 52-week low is Rs 22.65. The stock gave multibagger returns of 180 per cent from its 52-week low of Rs 22.65 per share whereas BSE Small-Cap Index is up by 6s5 per cent in the same period.

The company has a market cap of over Rs 4,500 crore. In February 2024, FIIs bought 4,62,33,331 shares and increased their stake to 6.21 per cent compared to December 2023. Investors should keep an eye on this small-cap stock.

Budget 2024 for Aviation Sector, Finance Minister Nirmala Sitharaman said; “The aviation sector has been galvanised in the past ten years. The number of airports has doubled to 149. The rollout of air connectivity to tier-two and tier-three cities under the UDAN scheme has been widespread. Five hundred and seventeen new routes are carrying 1.3 crore passengers. Indian carriers have proactively placed orders for over 1,000 new aircrafts. Expansion of existing airports and development of new airports will continue expeditiously”.

Disclaimer: The article is for informational purposes only and not investment advice.