Saturday, September 18, 2021

SpiceJet reaches settlement with aircraft lessor CDB Aviation amid financial pressures

Low-cost airline SpiceJet has “commercially agreed” to a settlement over the lease of Boeing MAX aircraft from CDB Aviation, less than three weeks after reaching a similar deal with Avolon, another plane lessor, as it battles the adverse impact of the pandemic and other pressures on its finances.

“This will add to the already announced settlement with Avolon and grow its fleet of 737 MAX aircraft. The airline expects to start operations of MAX aircraft around the end of September 2021, subject to regulatory approvals,” the airline said in a statement.

CDB Aviation’s fleet consists of 379 owned and committed aircraft and its global customer network comprises 72 lessees across 37 jurisdictions. Besides SpiceJet, its clients in India include AirAsia India, GoAir (now GoFirst)  and IndiGo.

The announcement comes within three weeks of an announcement by SpiceJet that it had reached a settlement with Avolon, another major lessor of MAX aircraft, amid speculation over its financial health. The aviation regulator recently lifted a ban on the operation of MAX aircraft clamped following two major plane crashes overseas in 2019.

On August 12, the airline reported a net loss of Rs 729 crore in the first quarter of the financial year, up from a net loss of Rs 593 crore in the year-ago period, as its flights suffered the impact of the second wave of COVID-19 and pricing pressures.

Earlier this month, SpiceJet employees at Delhi airport walked out over alleged non-payment of salaries. In response, an airline spokesperson said, "The issue with a section of SpiceJet employees at  Delhi airport has been resolved and the employees have returned to work. SpiceJet’s flight operations remain normal."

SpiceJet deferred payments to various parties including aircraft lessors and other vendors and its dues to statutory authorities.

“Where determinable, the company has accrued for additional liabilities, if any, on such delays in accordance with contractual terms/applicable laws and regulations and based on necessary estimates and assumptions. However, it is not practically possible to determine the amount of all such costs or any penalties or other similar consequences resulting from contractual or regulatory non-compliance. The management is confident that they will be able to negotiate settlements in order to minimize/avoid any or further penalties. In view of the foregoing, no amounts of such penalties have been recorded in these standalone financial results,” auditor Walker Chandiok &.Co LLP has said.

17/09/21 Ashwini Phadnis/Moneycontrol

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