Acuité has assigned its long term rating of ‘ACUITE BB-’ and short term rating of ‘ACUITE A4+’ to the Rs1,450.00cr bank facilities of SpiceJet Limited. The outlook is ‘Stable’.
The rating takes into account SpiceJet’s market position as the second largest domestic airliner in India and its systemic importance in the low cost air travel space, the gradual revenue diversity through the cargo business and the experience of the management with a track record of past turnaround in the airline’s operations.
While the airline industry has been severely impacted by the Covid pandemic since FY21, SpiceJet’s credit quality is also constrained by the challenges around its Boeing Max fleet and the uncertainty around the compensation from Boeing, the renegotiation of lease rentals and its weak financial position.
Although, the company has a moderate level of debt and upcoming repayments, timely infusion of equity and receipt of additional working capital facilities from banks would be critical for sustaining an adequate liquidity position.
11/08/21 India Infoline
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