The company said that the terms of the agreement will allow the airline to clear major liabilities, leading to a comprehensive revitalization of its balance sheet.

Under the terms of the agreement, SpiceJet will acquire full ownership of 13 EDC-financed Q400 aircraft, bolstering its operational capabilities and fleet management.

As part of the settlement, the low-cost air carrier will pay a comprehensive settlement amount to resolve outstanding liabilities amounting to close to $91 million as per SpiceJet books of accounts.

This settlement not only alleviates SpiceJet of a substantial financial burden but also lays the groundwork for a fortified balance sheet and substantial savings for the airline, it added.

Further, the company stated that the settlement to generate savings of Rs 567 crore ($68.3 million).

Ajay Singh, chairman and managing director of SpiceJet, said, “This significant milestone will allow us to strengthen our balance sheet and position the airline for long-term success.”

The liabilities stem from a loan acquired by the airline in 2011 for the procurement of 15 aircraft. With twelve of these Q400s currently grounded, their refurbishment and subsequent return to service will enable SpiceJet to promptly launch flights on numerous regional and UDAN routes, the company stated in the press release.

“This agreement heralds immense long-term savings for SpiceJet, liberating the airline from the obligation of regular monthly rentals for these aircraft. The accord with EDC represents a substantial boost for SpiceJet, reaffirming its resilience and determination to surmount financial challenges and emerge as a vastly stronger entity in the Indian aviation landscape”, it added.

SpiceJet operates as an Indian airline with a focus on providing affordable and accessible travel options for a wide range of Indian passengers. The company holds IATA-IOSA certification and manages a fleet comprising Boeing 737s, Q-400s, and freighters.

The low-cost air carrier’s consolidated net loss narrowed to Rs 448.99 crore in Q2 FY24 as compared with a net loss of Rs 833.32 crore in Q2 FY23. Revenue from operations slipped 29% year on year to Rs 1,347.52 crore in the quarter ended 30 September 2023.