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Home / Business / SpiceJet to finalise compensation deal with Boeing next month

SpiceJet to finalise compensation deal with Boeing next month

The US-based aircraft manufacturer would compensate SpiceJet for the grounding of the B737 MAX, which was grounded globally following two fatal accidents
Representational image.
Representational image.
Shutterstock

R. Suryamurthy   |   New Delhi   |   Published 21.09.21, 01:31 AM

Low-cost carrier SpiceJet is expected to finalise its compensation deal with Boeing next month.

The US-based aircraft manufacturer would compensate SpiceJet for the grounding of the B737 MAX, which was grounded globally following two fatal accidents.

Sources indicated that SpiceJet chairman Ajay Singh is scheduled to fly to the US next month to finalise the deal.

The airline has so far claimed more than Rs 1,200 crore in compensation from Boeing following the grounding of the planes since March 2019. Auditors to SpiceJet said during its June quarter results that the carrier would have reported steeper losses had it not recognised the other income, which were the dues from Boeing.

The airline had 13 737 MAX at the time of the ban. SpiceJet had in 2017 ordered 205 Boeing planes, including 100 units of 737 MAX 8 aircraft.

Industry sources said SpiceJet may not receive Boeing’s full compensation as aircraft makers do not prefer a direct or full cash payment and instead opt for other structures, which include discounts or roll-over of payments.

Deals with lessors

SpiceJet has reached commercial settlement with two major lessors of MAX aircraft which will result in a saving of around Rs 300 crore for the airline.

The deal with the two lessors enables the airlines to get four planes and it is hopeful of reaching the deal with other lessors soon.

While neither the airline nor the two lessors — Avolon and CDB Aviation — have made public the details of the agreement, sources said the lessors have agreed to write-off around Rs 300 crore of lease rental dues that had to be paid by the airline.

The airline hopes to save around Rs 1,000 crore in all once the settlements are finalised with the three other MAX lessors, SpiceJet sources said. The deal with the lessors comes at a time civil aviation regulator DGCA has lifted the ban on B737 MAX ahead of the festive season.

Sources said the airline plans to start flying it from the first week of October, which is considered as the busy earnings season for the airlines.

The airline is pinning hopes on the MAX as it hopes to cut fuel and maintenance bills resulting in massive savings. With the UAE  opening up for Indian tourists, SpiceJet can deploy these fuel-efficient aircraft on these short-haul international routes that would result in savings in terms of fuel and maintenance costs. 



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