SpiceJet resolves liabilities, IndiGo soars on UBS outlook

Indian aviation sector: SpiceJet has signed a pivotal settlement agreement with Export Development Canada (EDC), marking a significant step towards clearing major liabilities and revitalising its balance sheet. Meanwhile, IndiGo, India's largest commuter airline, witnessed a surge in its share price following a positive outlook from foreign brokerage firm UBS.

SpiceJet's $91 million settlement

SpiceJet's agreement with EDC entails the acquisition of full ownership of 13 EDC-financed Q400 aircraft, bolstering the airline's operational capabilities and fleet management. The settlement, amounting to close to $91 million as per SpiceJet's books, will alleviate the airline's substantial financial burdens, paving the way for a strengthened balance sheet and significant savings.

Ajay Singh, Chairman and Managing Director of SpiceJet, expressed satisfaction with the agreement, highlighting its importance in strengthening the airline's financial position and positioning it for long-term success. The liabilities addressed in the settlement originated from a loan acquired by SpiceJet in 2011 for the procurement of 15 aircraft, twelve of which are currently grounded. The refurbishment and return to service of these aircraft will enable SpiceJet to expand its operations, particularly on regional and UDAN routes.

IndiGo shares surge

Meanwhile, IndiGo's shares surged 6.02 per cent to reach a 52-week high of Rs 3,484 apiece on BSE on Tuesday, propelled by a positive outlook from UBS. The brokerage firm reiterated its bullish stance on IndiGo, citing robust growth prospects in the Indian aviation sector, efficient cost structure, and operational excellence. UBS raised its 12-month target price for IndiGo shares to Rs 4,000, indicating a potential upside of more than 21 per cent from Friday's closing price.

During an analyst meeting on March 22, IndiGo outlined its plans for FY25, including low double-digit ASK/demand growth year-on-year, expansion of its international network, and enhancing customer experience. Analysts across various brokerages maintain a positive outlook on IndiGo, reflecting investor confidence in its ability to navigate challenges and drive sustainable growth.

Indian aviation sector

In the aviation sector, private helicopter company Global Vectra Helicorp dipped close to 1 per cent today and grounded airline Jet Airways fell 4.97 per cent to hit the lower circuit of Rs 54.55 apiece on the NSE. The shares of Global Vectra Helicorp have risen 130 per cent in the past year. The shares of SpiceJet have risen close to 100 per cent and those of IndiGo have risen close to 90 per cent in the last one year.