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Fitch downgrades Hyderabad airport ratings

PTI Hyderabad | Updated on November 06, 2018 Published on November 06, 2018

Fitch ratings has downgraded its outlook on GMR’s Hyderabad international airport’s ratings and its USD 350-million bond issue rating to negative from stable.

The negative outlook reflects the significantly higher rating case forecast net debt to operating profit, averaging 4.7x versus 3.3x in our 2017 forecast. We believe that the higher capex driving this higher leverage forecast is justified by strong traffic growth and will be more efficient than the previous more conservative phased capex plan.

Nonetheless, the consequent increase in net debt to operating profit and execution risk drive the negative outlook,” Fitch said in a statement on Tuesday.

The airport reported a passenger traffic of 18.3 million, of which about 94 per cent were origin and destination passengers.

Traffic recovered within two years following the 2013 bankruptcy of Kingfisher Airlines, its main airline at the time with around a 35 per cent market share, demonstrating airport’s resilience against shocks, it said.

Indigo accounts for 28 per cent of aeronautical revenue which is not significantly more concentrated than peers, it added.

It noted that the airport is currently operating above designed capacity, with an utilisation ratio close to 150 per cent and the management plans to increase capacity from the current 12 million to 34 million passengers per year within four years, to be funded through a combination of additional borrowings and internal accruals.

Published on November 06, 2018
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