Launched in the 1990s out of Delhi through a partnership with Lufthansa (DLAKF) , low-cost carrier SpiceJet is now the fifth-largest airline in India when it comes to passengers carried.
It is most commonly used for flights between the very large country’s cities but also flies to certain international destinations popular with Indian tourists: Thailand, Sri Lanka, United Arab Emirates and Italy. Numbers from the airline show that it went from carrying 9.1 million passengers in 2022 to 12.7 million in 2023.
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But despite the large numbers of travelers who use SpiceJet, the airline has run into certain financial issues. On Sept. 22, the New Delhi branch of India’s National Company Law Tribunal (NCLT) issued the carrier a notice over debts equaling $16.7 million USD to Engine Lease Finance Corporation (ELFC).
The court was prepared to hear a petition against the airline under a section of India’s Insolvency and Bankruptcy Code that allows creditors to initiate a ruled resolution in the situation that owed debts are not paid.
Airline says it reached ‘mutually beneficial settlement’ over unpaid debt
Two days later, on Sept. 24, SpiceJet and ELFC announced that they reached a mutual agreement to settle the debt for an undisclosed amount that is likely less than what the creditor initially claimed.
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“We are pleased to have reached a mutually beneficial settlement with ELFC, which enables us to move forward with a clean slate,” SpiceJet Chairman and Managing Director Ajay Singh said in a statement. “This agreement not only resolves past issues but also strengthens our position as we embark on the next phase of growth and expansion.”
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This is why investors are still seeing potential in SpiceJet
This means the airline has avoided any bankruptcy proceedings that could have been initiated by the court if it had not come to this agreement. Last month, some travelers were not allowed to board SpiceJet flights to Dubai after the airport denied the right to fly passengers over the airline’s unpaid dues.
The airline has generally not been one of the carriers believed to be slated for bankruptcy despite its high debt level and the failed trajectories of a number of other Indian airlines in the last year. In December 2023, rumors swirled that SpiceJet could be one of the investors that would save rival bankrupt Indian airline Go First.
At the same time as the debt was settled, SpiceJet announced that it had raised Rs 3,000 crore (roughly $359 million USD) from investors that include Goldman Sachs, Morgan Stanley (MS) , Societe Generale (SCGLF) and Nomura Singapore (NRSCF) . The main reason foreign investors have SpiceJet on their radar has to do with the growing air traffic demand coming out of India.
In 2024, the country’s airports saw a 15% increase in the number of air passengers passing through to a total 376 million, while the airline has been taking steps to meet demand by investing in new aircraft and routes. Seeing the long-term potential, U.S.-based investment firm Carlyle recently also agreed to convert $50 million of the airline’s debt into equity.
At the start of 2024, Lufthansa Chief Commercial Officer Heiko Reitz also said that the airline was “taking our capacity from other markets and putting it into India.”
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