SpiceJet share price gained 7 percent on 9 October, extending the previous session’s rally, after the carrier said that it has amicably settled its dispute with lessors under Babcock & Brown Aircraft Management (BBAM) for $22.5 million. The settlement amount is a notable reduction from the original claim of $131.85 million, said SpiceJet in a stock exchange filing.

At about 10 am, SpiceJet stock was trading at Rs 66.9, up 6.5 percent from the previous close. The settlement comes amid the airline's ongoing efforts to strengthen the balance sheet and revitalize operations.

Ajay Singh, Chairman and Managing Director of SpiceJet, said: “This landmark settlement with BBAM allows us to significantly reduce our liabilities and reinforces our efforts to emerge as a more robust airline.”

SpiceJet recently raised Rs 3,000 crore via a Qualified Institutional Placement (QIP) as a pivotal point in its financial recovery initiative. In addition to the capital raised through the QIP, SpiceJet is also set to receive Rs 736 crore from a previous funding round.

The new capital has enabled the airline to clear outstanding dues and provide much-needed support for its operational growth. It has also allowed the airline to settle its outstanding Goods and Services Tax (GST) dues of Rs 71 crore and address pending salary arrears of Rs 80 crore for June to August 2024.

Earlier this week, SpiceJet recently announced plans to induct 10 new aircraft into its fleet by the end of November. This expansion includes seven leased aircraft and the reintroduction of three previously grounded planes. Two of the leased aircraft are already set to arrive in India and will be operational by October 10, with the full complement of new planes anticipated by mid-November.

The impending fleet expansion follows SpiceJet’s successful resolution of a $16.7 million claim by Engine Lease Finance Corporation (ELFC) on September 24, in another step towards clearing its financial hurdles.

SpiceJet faces significant financial challenges, with its outstanding dues of Rs 3,700 crore in lessor agreements, and engineering and statutory liabilities, at the time of the QIP fundraising. However, the recent QIP and settlements have paved the way for a more stable financial future, as seen in the share price. The airline aims to restore its operations to pre-2019 levels when it had 74 operational aircraft compared to just 28 at present.

The SpiceJet stock has delivered over 80 percent returns in the last year, taking the company’s market capitalization to over Rs 8,000 crore. The stock saw a more than 9 percent jump following the announcement of the fleet expansion yesterday.

The airline also plans to enhance connectivity and offer a wider range of travel options, while also exploring exclusive regional and international destinations to boost revenue as part of its broader expansion strategy, it had said in an investor presentation in September.