IndiGo Fiasco Aftermath | Moody's warns of revenue loss, downgrades score on human capital

Credit rating agency Moody’s Ratings on Monday (December 8) said InterGlobe Aviation Ltd (IndiGo) faces credit negative implications due to inadequate planning and weak preparedness for regulatory changes, despite the airline’s strong market position and stable Baa3 rating.

The rating agency said IndiGo’s recent operational disruptions exposed gaps in planning, oversight and resource management, which could result in revenue loss from cancellations, customer refunds and compensation, along with potential regulatory penalties. The DGCA issued show-cause notices on  December 6 to Chief Executive Officer Pieter Elbers and Chief Operating Officer Isidro Porqueras, raising concerns over the continuity of senior leadership.

Moody’s downgraded IndiGo’s human capital issuer score to 4 from 3 due to the adverse impact of slower hiring. The management track record governance score remains at 3, reflecting a lack of judgement and preparedness. The social risk score remains at S-4, while the governance risk score remains at G-3.

Also Read: IndiGo shares fall most since February 2022, market cap falls below ₹2 lakh crore

"We have downgraded IndiGo's issuer category score for human capital to 4 from 3, reflecting the adverse impact of slower hiring on the airline's operations. Although IndiGo does not have employee unions, its pilots, through broader pilot associations in India, possess significant collective bargaining power," the agency said.

While the fundamentals of the Baa3 rating remain intact, supported by IndiGo’s dominant market share, low air travel penetration in India and long-term leverage is expected to remain below 3.5x, Moody’s said profitability for the fiscal year ending March 31, 2026, will be negatively impacted. It also warned of reputational damage that could affect code-sharing arrangements. The quantitative impact of the disruption remains uncertain.

The airline cancelled around 1,600 flights on December 5. On-time performance fell to 68% in November from 84% in October, with more than 1,200 cancellations during November. Winter fog further worsened operations, leaving many passengers stranded. Following a schedule reset on December 5-6, the airline restored services, with 1,650 of 2,200 daily flights operational and full restoration expected by mid-December.

Also Read: IndiGo says daily flights recover to over 1,500, network connectivity back on track

On December 5, the Directorate General of Civil Aviation (DGCA) granted IndiGo a temporary exemption from phase 2 of the Flight Duty Time Limitation rules. Phase 2, effective from November 1, 2025, redefined duties between midnight and 6 am as night duty and reduced permissible landings within a 24-hour window from six to two or three.

The exemption remains in force until February 10, 2026 and is subject to 15-day reviews. IndiGo must submit detailed compliance reports and a 30-day roadmap for full adherence to the rules.

Also Read: DGCA to summon IndiGo CEO, COO; airline says network fully restored, ₹827 cr refunded

The Ministry of Civil Aviation directed IndiGo to process all customer refunds by December 7, without levies. No penalties have been imposed so far, but Moody’s said the possibility remains.

Shares of Interglobe Aviation Ltd ended at ₹4,926.55, down by ₹444.75, or 8.28%, on the BSE today, December 8.

Also Read: IndiGo turbulence: Six tough questions the airline must answer