Tuesday, September 15, 2020

SpiceJet Says Boeing Max Compensation Offer More Than Recognized

SpiceJet Ltd., one of the world’s biggest customers for Boeing Co.’s now-grounded 737 Max jets, said an interim offer of compensation from the U.S. planemaker is higher than what the Indian budget carrier recognized earlier. SpiceJet, India’s second biggest airline, has been using an unusual accounting method to book income on expected compensation from Boeing in the past few quarters.SpiceJet, which had 13 Boeing 737 Max jets in its fleet when they were grounded worldwide, has added 8.6 billion rupees ($117 million) as other income from compensation and related foreign exchange gains in the past five quarters, the company said.
Based on current advanced discussions and an interim offer from Boeing, “which is higher than the amount recognized by the company,” SpiceJet is confident of collecting that amount, it said in its quarterly earnings statement to stock exchanges. However, its auditors S.R. Batliboi & Associates, cautioned in a report posted on stock exchanges that “there is no virtual certainty to recognize such other income and related receivable.”
SpiceJet’s comments may provide some insight into the costs Boeing may incur for compensating carriers worldwide over lost revenue, which is expected to run into several billions of dollars. The 737 Max, which was idled last year following two deadly crashes, is now under review by the U.S. Federal Aviation Administration and could return to service before the end of this year.
15/09/20 Anurag Kotoky/Bloomberg Quint
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