India Ratings has downgraded GoAir's long-term issuer rating to IND BBB+ from IND A-, expressing concerns over the group's operating performance in FY20. The rating agency maintained Go Airlines on Rating Watch Negative (RWN).
"The downgrade reflects the decline in GoAir’s operating performance in FY20 and the likelihood of further deterioration in the same in FY21 along with a weakening of the liquidity profile following the COVID-19 outbreak and associated lockdown," India Ratings said in a statement.
The aviation sector is one of the sectors most affected by the coronavirus pandemic. India had banned all commercial flights for two months, and resumed only domestic flight operations on May 25.
India Ratings forecasts a sharp deterioration in GoAir's revenue and operating performance in FY21.
India Ratings also said its is tracking funding support provided by the promoters, Wadia Group, to the airline.
"The promoters play an active role in the airline's operation, with day-to-day interactions with Go Air’s management on financial and operational performance. Ind-Ra has received confirmation that the airline business is one of the key growth areas for the group, and hence, is strategically important," India Ratings said.
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