SpiceJet resolves ₹413 cr dispute with Echelon Ireland Madison One

Budget carrier SpiceJet today announced the resolution of a $49.8 million (₹413 crore) dispute with Echelon Ireland Madison One Ltd.

The low-cost airline says this settlement marks a significant milestone, resulting in substantial cost savings and further strengthening of the company's balance sheet. "The settlement with Echelon Ireland Madison One Ltd. will result in savings of $48 million (₹398 Crore) for SpiceJet," the cash-strapped carrier says.

As part of the agreement, SpiceJet will acquire two airframes, enhancing the airline's fleet and operational capabilities, it says in a stock exchange filing.

"This settlement marks the third major resolution for SpiceJet following its recent fundraising. These successful settlements have resulted in total savings of ₹685 crore for the airline, further solidifying SpiceJet's financial stability and balance sheet," the filing says.

"This settlement not only underscores our commitment to financial prudence but also enables us to further fortify our fleet with the acquisition of two airframes," says Ajay Singh, chairman and managing director, SpiceJet.

Shares of SpiceJet rose 4% to ₹65.40 in intraday trade on the BSE.

On February 28, SpiceJet announced that it had mutually settled its $29.9 million (₹250 crore) dispute with Celestial Aviation resulting in savings of ₹235 crore. On March 5, SpiceJet said it had reached settlement terms with aircraft leasing firm, Cross Ocean Partners, resolving a dispute of about $11.2 million (₹93 crore).

SpiceJet is currently in the midst of a revival plan, having completed the first tranche of capital infusion amounting to ₹744 crore.

Last month, SpiceJet chairman and managing director Singh announced a joint bid for bankrupt no-frills carrier GoFirst. Singh submitted the bid in his personal capacity along with Busy Bee Airways Private Ltd. SpiceJet said its role as the operating partner for the new airline involves providing essential staff, services, and industry expertise. This collaboration is anticipated to generate synergies between the two carriers, leading to improved cost management, revenue growth, and a strengthened market position within the Indian aviation industry, it said.

"I firmly believe that GoFirst holds immense potential and can be revitalized to work in close synergy with SpiceJet, benefiting both carriers. Apart from coveted slots at domestic and international airports, international traffic rights, and an order for over 100 Airbus Neo planes, GoFirst is a trusted and valued brand among flyers," said Singh.

After announcing fundraising plans, cash-strapped SpiceJet in February clarified the reports of sacking at least 1,000 employees, saying the decision to implement cost-cutting measures will ensure it achieves "profitable growth". The move, it says, will save up to ₹100 crore for the company.