SpiceJet woes may continue even after 737 MAX return

The Directorate General of Civil Aviation (DGCA)’s decision to allow the return of Boeing Co.’s 737 MAX, will help SpiceJet Ltd, the sole operator of the aircraft in India, to cut operating costs and improve cash flows from the sale and leaseback (SLB) of new aircraft.

Under SLB, an airline buys an aircraft and sells it to a lessor at a profit to lease it back for its own use. It not only helps generate cash, but also removes the aircraft, and its associated debt, from the carrier’s balance sheet.

Loss-making SpiceJet, which has so far claimed more than ₹1,200 crore in compensation from Boeing following the grounding of the planes in March 2019, will not be able to make further claims from the aircraft manufacturer.