SpiceJet shares rally over 8% on dispute settlement with Babcock & Brown Aircraft mgt

Shares of SpiceJet surged over 8% in early trade on Wednesday, extending its gaining streak for the second straight session, after the carrier settled a dispute with Irish aircraft lessor Babcock & Brown Aircraft Management (BBAM). The low-cost carrier has settled a $131.85 million (around ₹1,107 crore) dispute with its lessors, Horizon Aviation 1 Ltd., Horizon II Aviation 3 Ltd., and Horizon III Aviation 2 Ltd., which are the lessors under the management of BBAM, for $22.5 million. The development came three weeks after the airline raised ₹3,000 crore via qualified institutional placement (QIP) that concluded on September 20.

This settlement comes on the heels of SpiceJet’s successful resolution of a dispute with Engine Lease Finance Corporation (ELFC) on September 24, which had claimed $16.7 million. “These two major settlements demonstrate SpiceJet's commitment to resolving financial matters and ensuring a stronger financial foundation for the airline’s future,” it said in a release last evening.

Cheering the news, shares of SpiceJet jumped 8.2% to hit a high of ₹67.98 on the BSE, while the market capitalisation climbed to ₹8,580 crore. Early today, the aviation stock opened 3.5% higher at ₹65, after ending 9.1% up at ₹62.80 per share in the previous session after it unveiled a plan to induct ten planes by November‐end.

SpiceJet shares touched its 52-week high of ₹79.90 on September 16, 2024, and a 52-week low of ₹34 on October 26, 2023. In the last one year, the aviation heavyweight gained 95%, while it added nearly 11% in the calendar year 2024. In the last six months, the stock saw a correction of 4%, whereas it gained over 5% in a month.

In a regulatory filing last evening, Ajay Singh-led airline said that SpiceJet achieved a significant financial milestone with the amicable settlement of its dispute with its lessors, BBAM. “The dispute, valued in aggregate at $131.85 million (approximately ₹1,107 crore) with aforesaid lessors has been resolved for $22.5 million,” it said in a BSE release.

As per the release, the settlement is one of the largest financial agreements reached by SpiceJet, marking a substantial step towards strengthening the airline’s balance sheet and reducing its overall liabilities. “By resolving this major dispute, SpiceJet has cleared a significant hurdle, paving the way for improved financial stability and operational efficiency.”

The settlement will pave the way for a stronger balance sheet and enhanced operational capabilities, says SpiceJet.

“This landmark settlement with BBAM allows us to significantly reduce our liabilities and reinforces our efforts to emerge as a more robust airline. Together with the funds raised through our QIP, we are well-positioned to focus on growth, ungrounding our fleet, and expanding our services,” says Ajay Singh, Chairman and Managing Director of SpiceJet.

In a separate development, SpiceJet on October 8 announced that it would expand its fleet by the end of November with the induction of ten aircraft. Seven of these aircraft will be acquired on lease, while three previously grounded SpiceJet planes are being reintroduced into service, as per the company.

The release notes that the airline has already signed agreements for the leased aircraft, with the full induction of all seven planes expected by November 15. Two of these leased aircraft have already arrived in India and are scheduled for immediate induction. SpiceJet will also operationalise its grounded planes in phases, with the first three set to re-enter service before the end of November, it adds.

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