IndiGo disruptions may dent airline’s revenue, Moody’s warns

Global credit rating agency Moody’s has assigned a negative rating to IndiGo following major flight disruptions at the airline.

In a statement on Monday, it cautioned that 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.”

The rating agency noted the adverse impact of slower hiring on the airline’s operations as well as management’s lack of judgment and preparedness for the impending regulatory changes, referring to the new rest and duty norms for pilots effective from November 1 .

Moody’s also noted potential reputational damage for IndiGo, which could impact the airline’s partnerships, including code-sharing arrangements.  However, it stated that quantifying the full impact of the disruptions is currently not possible.

The airline’s parent company InterGlobe Aviation’s stock price fell 8.3% on the Bombay Stock Exchange (BSE) and 8.6% on the National Stock Exchange (NSE) on Monday. Cumulatively, the stock has fallen about 17% on both exchanges since November 27.