Fitch affirms Delhi, Hyderabad airports' ratings at 'BB+' with negative outlook

The Negative Outlook reflects the ongoing uncertainty relating to the timing and duration of the traffic shock and recovery caused by the coronavirus pandemic, the rating agency said on Tuesday.

HYDERABAD: Fitch Ratings has affirmed the Long-Term Issuer Default Rating (IDR) and bond issue ratings of GMR-led Delhi Airport and Hyderabad Airports at 'BB+' with a Negative Outlook.

The Negative Outlook reflects the ongoing uncertainty relating to the timing and duration of the traffic shock and recovery caused by the coronavirus pandemic, the rating agency said on Tuesday.

GMR Hyderabad International Airport Limited (GHIAL) and Delhi International Airport Limiteds (DIAL) operations are limited to cargo and evacuation flights under these circumstances.


A prolonged pandemic and nationwide lockdown, and further deterioration in the economy, will reduce air passenger traffic and lead to lower aeronautical and non- aeronautical revenue than Fitch expects, it said.

"We currently assume a recovery from the traffic and revenue shock in the financial year ending March 2022 (FY22) as DIAL operates a strategic airport serving the country's national capital region and benefits from a high share of domestic traffic, with greater resilience.

However, we will revise our rating case accordingly if the severity and duration of the outbreak are worse than our current expectations," Fitch said in case of Delhi Airport.
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DIAL has implemented various measures to reduce its operating expense including consolidation of terminal operations, reduction of utility costs, and rationalisation of manpower and consultants.

Management indicates operational costs could be contained at a minimum of about Rs 900 crore for FY20-FY21.

DIAL has also deferred some of its capex originally budgeted for FY21 In light of the reduced cash flow in the near term.

DIAL had total cash and a bank balance of about Rs 4,000 crore in early May 2020.
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Fitch believes the company has sufficient liquidity to meet its operating expense and debt payments.

DIAL has no major debt maturities until 2022, the rating agency said.
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GHIAL had total cash and a bank balance of about Rs 2200 crore in late April 2020.

The company could also draw down a banking limit for the expansion plan Fitch said adding it believes the company has sufficient liquidity to meet its operating expenses and debt payments.
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