InterGlobe Aviation Limited has informed stock exchanges that CRISIL Ratings Limited has placed the company's credit ratings on 'Rating Watch with Developing Implications' due to the ongoing Middle East conflict's potential impact on business and financial risk profiles.

Rating Action Details

CRISIL has placed ratings on bank facilities worth Rs 9000 crore under watch, affecting both long-term and short-term ratings:

Impact of Middle East Conflict

The rating watch reflects the persistence of the ongoing Middle East conflict, which has led to significant operational and financial challenges for IndiGo. The conflict has resulted in cancellation of substantial overseas flights to or through the Middle East, including CIS countries and Europe, which account for approximately 17% of the total available seat kilometre of IndiGo.

The conflict has driven up global crude prices substantially, with a notable increase of 60-70% over the past month. Additionally, the Indian rupee has depreciated to Rs 93.5-94.0 per US dollar from around Rs 91 at the end of February 2026.

Financial Performance Impact

These factors significantly impact aviation turbine fuel prices, which constitute 35-40% of IndiGo's total operating cost, as well as other dollar-denominated operating costs such as rentals and maintenance (35-40% of overall operating cost).

During the first nine months of fiscal 2026, revenue from operations grew 6.6% to Rs 62,524 crore, supported by healthy passenger growth across domestic and international networks despite multiple disruptions. However, the operating Ebitdar margin fell to 20% from 24.1% in the corresponding period of the previous fiscal due to external challenges and foreign exchange mark-to-market losses from rupee depreciation.

Market Position and Operations

IndiGo maintains its established market position in the Indian aviation sector with approximately 64% domestic market share between April 2025 and February 2026. The company has consistently maintained passenger load factor above 80% over the past few years and through February 2026.

Financial Risk Profile

The company maintains a healthy financial risk profile with strong liquidity position. Net debt to Ebitdar ratio was approximately 2.1 times during the 12 months through December 2025, compared to approximately 2.0 times in the corresponding period of the previous fiscal.

Leadership Transition

CRISIL has noted the appointment of Mr. William Walsh as new CEO on March 31, 2026, subject to regulatory approval, with expected joining on or before August 03, 2026. This follows the resignation of Pieter Elbers from the CEO position. In the interim, Rahul Bhatia, the current Managing Director, has taken charge of managing company affairs effective March 10, 2026.

Rating Outlook

CRISIL will continue monitoring developments regarding movement in ATF prices, currency fluctuations, grounding or re-routing of overseas flights, and their expected normalization over the near term. The rating agency will assess the likely impact on sustained demand and costs, subsequently affecting business and financial risk profiles, before taking appropriate rating action.

Indian Oil Corporation has issued a clarification regarding Aviation Turbine Fuel (ATF) pricing, confirming that prices have been increased by 8.5% rather than the 115% figure mentioned in an earlier notification. This correction provides significant relief to domestic airlines including IndiGo and other carriers operating in the Indian aviation market, as the actual increase is substantially lower than initially communicated.

Price Correction Details

The clarification from IOC addresses confusion created by the earlier notification that suggested a dramatic price surge. The corrected pricing structure shows a more moderate adjustment that aligns with typical fuel price fluctuations in the aviation sector.

Impact on Aviation Operations

The 8.5% increase represents a manageable cost adjustment for domestic airlines compared to the previously feared 115% hike. This moderate increase will have a significantly reduced impact on operational expenses for carriers like IndiGo, allowing airlines to maintain more stable fare structures and operational planning.

Market Stability

IOC's prompt clarification helps restore market confidence and provides airlines with accurate cost projections for their fuel budgeting. The corrected figure of 8.5% falls within normal industry expectations for fuel price adjustments, reducing concerns about severe operational cost pressures on the domestic aviation sector.