Boeing Co has agreed to settle outstanding claims with SpiceJet Ltd relating to the grounding of its 737 Max aircraft and their return to service.
“This paves the way for the induction of efficient and younger Max aircraft into the company’s fleet and ensures the resumption of new aircraft deliveries from our order of 155 Max aircraft,” India’s second-biggest carrier said in an exchange filing. The amount wasn’t disclosed.
The settlement will come as a relief to SpiceJet, which is losing money and has reverted to paying employees based on hours worked in addition to deferring salaries for some staff after its business was hurt by the pandemic. SpiceJet has been trimming its losses by booking other income on the amount it expected to get in compensation from Boeing for not being able to fly its 13 Max aircraft. The carrier booked other income of $50 million in the year through September 30.
“This is a big boost to SpiceJet, which is struggling to get support to address debt vulnerabilities,” said Arun Kejriwal, founder at Kris Capital, a Mumbai-based investment advisory firm. “This will give SpiceJet more ammunition to deal with creditors as a settlement will reduce stress on liquidity concerns. We’re awaiting more clarity on the nature of settlement of the claim, including the non-cash portion.”
Boeing’s 737 Max jets were grounded worldwide more than two years ago following crashes in Indonesia and Ethiopia that killed 346 people. While the US, Europe and most other major markets have allowed the planes to resume flying in late 2020 or earlier this year following extensive fixes, India and China held back.
India lifted its ban in August, leaving China as the only leading aviation market yet to allow the aircraft to resume service.
SpiceJet, only current Indian operator of Boeing Max planes, said in August that it expected to start operations of the aircraft around end of September, pending regulatory approvals.