SpiceJet stock surges 12% after ₹100 cr repayment to City Union Bank

The SpiceJet stock closed 12.44% intraday today after the budget airline announced it has repaid ₹100 crore loan to City Union Bank, thereby freeing up all collaterals pledged.

The airline stock opened a gap up at ₹27.54 and surged to the intra-day high of ₹31.80, before settling at ₹30.64 by the end of the trading session. The stock has surged 11.05% in the past week, while it's up 17.57% in the past month. At the current share price, the homegrown carrier's market cap stands at ₹1,844.06 crore.

SpiceJet in a statement today said it has successfully completed the settlement of payment of ₹100 crore to City Union Bank. "The last tranche of INR 25 crore was paid on 30 June 2023, successfully closing the entire loan account which was taken in the year 2012."

The Gurugram-based airline said the repayment of the loan amount releases all securities that had been pledged with the bank.

The repayment to City Union Bank follows a successful settlement agreement with Nordic Aviation Capital (NAC), a major lessor for SpiceJet’s Q400 aircraft. The pact with NAC settles all past liabilities for the Q400s leased by NAC to SpiceJet and will allow the return and induction of three additional planes into the SpiceJet fleet.

SpiceJet also plans to borrow around ₹400 crore to revive 25 grounded aircraft. The airline says funds for the revival will be drawn from the government’s Emergency Credit Line Guarantee Scheme (ECLGS) and better cash accruals.

Last month, the airline had announced to induct 10 Boeing 737 aircraft into its fleet, including five 737 Max aircraft. The efforts are the company's plans to restore and revive its grounded aircraft.

The airline also announced a partnership with the U.S.-based commercial jet engines owner FTAI Aviation to restore the fleet under the CFM6 revitalisation programme. FTAI will provide SpiceJet with up to 20 engines for lease, inclusive of maintenance services.

The move is expected to provide SpiceJet access to a pipeline of available engines, which eliminates the need for frequent shop visits. The company says the first engines will be used to support the re-activation of SpiceJet's aircraft fleet over the next 2-3 months and will be critical for service on new routes.

The net profit of SpiceJet surged 160% year-on-year to ₹110 crore for the quarter that ended December 31, 2022, aided by strong performance in both passenger and cargo businesses. Revenue from operations rose 2.5% to ₹2,316.8 crore in the third quarter compared with ₹2,262.6 crore in the corresponding period last fiscal.

Separately, in a setback to the airline, the Delhi High Court last month ordered SpiceJet to pay ₹380 crore to the airline's former promoter, Sun Group chairman, and founder Kalanithi Maran. The court, however, passed the order, saying the airline violated its previous decision on a share transfer dispute.