Multibagger airline stock below Rs 70 in green as the company settles Rs 93 crore dispute with Cross Ocean Partners: details inside!

The stock gave multibagger returns of 187 per cent from its 52-week low of Rs 22.65 per share whereas BSE Small-Cap Index is up by 51 per cent in the same period.

SpiceJet Ltd announced today that it has reached a settlement term with aircraft leasing firm, Cross Ocean Partners, resolving a dispute of about USD 11.2 million (Rs 93 Crore). The parties made this joint announcement before the Delhi High Court in the ongoing execution petition being pursued by Cross Ocean Partners.

The settlement is expected to result in significant savings for SpiceJet and also put an end to the dispute. As part of the arrangement, the airline will also benefit from the transfer of an airframe and an engine at no additional cost, augmenting its operational capabilities. By resolving this dispute through amicable negotiations, SpiceJet and Cross Ocean Partners have demonstrated their commitment to finding mutually beneficial solutions and avoiding prolonged litigation.

Earlier, SpiceJet and Celestial Aviation, a subsidiary of AerCap, one of the largest aircraft lessor groups, successfully resolved their long-standing dispute of USD 29.9 million (approximately Rs 250 crore) through amicable negotiations, avoiding potential litigation costs. This settlement is expected to save SpiceJet an additional Rs 235 crore. Representatives from both parties informed the National Company Law Tribunal (NCLT) last week that a settlement had been reached and requested an adjournment, which was granted by the court. The matter is now scheduled to be formally withdrawn on March 1, 2024.

SpiceJet also bolstered its financial position by securing an impressive Rs 1,060 crore investment through a preferential issue. Notable investors backing the airline include Aries Opportunities Fund Limited and Elara India Opportunities Fund Limited. The airline plans to utilize a portion of these funds to clear past liabilities. This strategic move received approval from SpiceJet's Board of Directors on February 21, 2024, resulting in the allocation of 4.01 crore equity shares to two investors, including Aries Opportunities Fund Limited.

Furthermore, 2.31 crore warrants were issued to four investors, including Elara India Opportunities Fund Limited, granting them the option to purchase an equivalent number of equity shares in the future. FIIs, Aries Opportunities Fund Limited was allocated 4,00,00,000 war and Elara India Opportunities Fund Limited was allocated 63,00,000 shares worth Rs 231,50,00,000.   

Today, shares of SpiceJet Ltd surged 3.87 per cent to an intraday high of Rs 65 per share from its previous closing of Rs 62.58 per share. 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 187 per cent from its 52-week low of Rs 22.65 per share whereas BSE Small-Cap Index is up by 51 per cent in the same period. The company has a market cap of over Rs 4,400 crore.

In a bid to reshape the Indian aviation industry, SpiceJet's Ajay Singh and Busy Bee Airways have partnered to acquire GoFirst, with SpiceJet leveraging its expertise to improve cost, revenue, and market share for both airlines. This strategic move coincides with SpiceJet's financial recovery, which includes capital raising, operational expansion like Haj flights, and a strengthened position following the NCLT's dismissal of an insolvency petition. 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 galvanized 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.