India Ratings Downgrades GoAir’s Debt, Highlights Liquidity Concerns


India Ratings downgraded GoAir’s debt and reported concerns about liquidity and deteriorating operating performance in fiscal year 21.

GoAir’s total debt increased six percent sequentially to 1,891 billion rupees in the June quarter, and unencumbered cash and bank balances almost halved to 72.5 billion rupees over the same period, the rating agency said in a report.

Total debt included loans from companies in the Promoter Group to support business operations.

GoAir went into operation on June 1st and is said to operate 15 to 18 aircraft a day. The loss of revenue during the lockdown, the currently subdued passenger demand and the high fixed costs continue to cause concern.


In its latest revision, the agency downgraded the rating for fund-based working capital limits and negatively monitored lending.

GoAir did not immediately respond to an email request on the subject.

India Ratings downgrades GoAir's debt, highlights liquidity concerns
Image – Business Standard

The agency expects GoAir’s revenue and operating margin to decrease sharply in fiscal year 21.

  • According to preliminary information, GoAir’s revenue rose by 13 percent to 7,100 billion rupees in fiscal year 20, supported by a 28 percent increase in passengers.
  • The airline made a net loss of 1,346 billion rupees in fiscal year 20 compared to a net profit of 1,346 billion rupees, Rs 123 crore in FY19 due to higher provisions and currency losses.

However, the airline’s revenue profile will be impacted in fiscal year 21, and the depreciation of the rupee will continue to weigh on the company’s overall costs.


The agency believes that cost-cutting measures such as paying employees without pay are unlikely to increase profitability.

As of June 30, GoAir had unencumbered cash and bank deposits of 72.5 billion rupees (140.9 billion rupees on March 31).

While the average workload of the sanctioned fund-based limits was 55 percent in the twelve months to June 2020, it rose significantly from March to June 2020 to around 89 percent.

According to India Ratings, needs-based funding support from the Wadia Group remains an important rating that can be monitored as the liquidity needs could continue to be significantly high given the disruption caused by COVID-19.


(Source – Business Standard)

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Manish Khandelwal
Manish Khandelwal

Manish Khandelwal, a travel-tech enthusiast with over a decade of experience in the travel industry. Founder and Editor-in-Chief of, he's passionate about writing.

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