SpiceJet Share Price Jumps 8% After Airline Settles Rs 1,107-Crore Dispute

SpiceJet Ltd.'s share price jumped over 8% on Wednesday after the airline settled its dispute valued at $131.85 million (approximately Rs 1,107 crore) with Babcock & Brown Aircraft Management. It was resolved for $22.5 million.

SpiceJet entered into a settlement of its dispute with Horizon Aviation 1 Ltd., Horizon II Aviation 3 Ltd., and Horizon III Aviation 2 Ltd.—the lessors under the management of Babcock & Brown Aircraft Management, it said in a statement.

The settlement represents one of the largest financial agreements reached by the airline. This marks a substantial step towards strengthening the airline’s balance sheet and reducing its overall liabilities, SpiceJet said.

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

This settlement comes after it amicably settled another $16.7 million (approximately Rs 140 crore) dispute with Engine Lease Finance Corp.

The low-cost carrier raised Rs 3,000 crore via qualified institutional placements earlier to address the financial and operational challenges currently plaguing the airline.

SpiceJet's stock rose as much as 8.25% during the day to Rs 67.9 apiece on the BSE. It pared gains to trade 6.3% higher at Rs 66.8 apiece, compared to a 0.22% advance in the benchmark BSE Sensex as of 10:02 a.m.

It has risen 93% during the last 12 months and 11% on a year-to-date basis. Total traded volume so far in the day stood at 2.5 times its 30-day average. The relative strength index was at 53.

Of the four analysts tracking the company, one has a 'buy' rating on the stock, two suggest a 'hold' and one has a 'sell', according to Bloomberg data. The average of 12-month analysts' price targets implies a potential downside of 30%.