Mumbai, Dec 8 (UNI) Global credit rating agency Moody’s Ratings issued an official statement on Monday stating that widespread disruptions in IndiGo flights, could result in financial damage due to loss of revenue.
In a note, Moody’s said the disruptions are “credit negative” for the airline. “Despite temporary reprieve, failure to effectively plan for new aviation regulations is credit negative.”
“The disruptions are credit negative because IndiGo could face significant financial damage from loss of revenue because of flight cancellations, refunds and other compensation to affected customers, along with potential penalties imposed by DGCA,” according to the Moody’s statement.
Although IndiGo’s ‘Baa3’ rating with a stable outlook remains unchanged, Moody’s downgraded the airline’s human capital category score from 3 to 4, citing the impact of delayed hiring on operations.
Moody’s also maintained a governance score of three, indicating moderate governance risk, and highlighted the absence of employee unions but pointed to the bargaining strength of pilots through broader industry associations.
Moody’s cited the airline’s “significant lapses in planning, oversight and resource management” as the primary cause, noting that the regulations had been communicated to the industry more than a year in advance.
“Recent flight disruptions underscore significant lapses in planning, oversight and resource management by IndiGo because the new regulations had been known to the industry for more than a year. The airline’s lean operations, which provide cost efficiencies in stable times, lacked the resilience needed for this change in regulations, leading to the need for a system-wide reboot that led to cancellation(s),” according to the statement issued by Moody’s.
