India’s SpiceJet awaits higher-than-expected MAX payout

In its latest earnings report for the quarter ending June 30, SpiceJet (SG, Delhi Int’l) has said that an interim offer of MAX-related compensation from Boeing is “higher than the amount recognised by the company” and that it “is confident in the ultimate collection” of this income. In relation to the compensation, the low-cost carrier has added INR8.6 billion rupees (USD117 million) to its published accounts over the last five quarters, under “other income from compensation and related foreign exchange gains.” SpiceJet is one of the world’s biggest customers for the MAX and took delivery of thirteen B737-8s prior to the type’s grounding in mid-March 2019. It has a further 129 of them on firm order from the manufacturer. However, although the quarterly report’s auditors, Mumbai-based SR Batliboi & Associates, “have qualified their report on the financial results in this regard,” they cautioned that “there is no virtual certainty to recognise such other income and related receivable.” According to Bloomberg, the comments in the report provide some insight into the costs Boeing may incur in having to compensate airlines around the world for lost revenue related to MAX aircraft, which is still under review at the United States Federal Aviation Administration but may return to service by the end of 2020. SpiceJet posted a net loss of INR5.934 billion (USD80.6 million) for the quarter, slumping from its highest-ever first-quarter profit of INR2.617 billion (USD35.6 million) a year earlier.