| Airports Authority of India | ||||
| Rating Reaffirmed | ||||
| Rating Action | ||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||
| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL AAA/Stable’ rating on the bank facilities of Airports Authority of India (AAI). CRISIL Ratings has also withdrawn its rating on bank loan facilities of Rs 2100 crore at the company's request and on receipt of a no-dues confirmation from the lender. The withdrawal is in-line with CRISIL Ratings' policy on withdrawal of bank loan ratings.
The rating continues to reflect the strategic importance of AAI to the government and healthy financial risk profile. These strengths are partially offset by exposure to the risk of revenue concentration because of the limited number of profitable airports. |
Analytical Approach The rating factors in support from the Government of India. AAI is expected to receive distress support from the government for timely servicing of debt, considering the entity's strategic role in the implementation of the country’s aviation policy. |
Key Rating Drivers & Detailed Description Strengths: High strategic importance to the government AAI was set up through an Act of Parliament in 1995, underscoring the authority's importance to the government as a nodal agency to regulate air traffic control (ATC) and develop and maintain airports. The authority manages the entire airspace in India and adjoining ocean areas. Airspace being a sensitive security issue, the government prefers to have a state-owned agency managing it. Investment in airport infrastructure is vital to economic growth and, therefore, creates a strong incentive for the government to continue supporting the nodal agency. Though many of the airports managed by AAI are small and unprofitable, they provide connectivity to far-flung places and, hence, are important for economic development. All major capital expenditure (capex) of AAI is approved by the government. The board of AAI also has a representative of the ministry of civil aviation. In addition, the government provides grants to AAI for carrying out infrastructure development of specified areas. In fiscal 2023, AAI received grants from the government of Rs Rs.1309.99 crore, against Rs 1102.50 crore in the previous fiscal.
Healthy financial risk profile AAI’s financial risk profile is supported by robust capital structure and strong cash accruals. This can be seen through net cash accrual of ~Rs 1300 crores in fiscal 2022. The operating revenue improved by around 40% in fiscal 2022, compared to the previous fiscal. Traffic has shown steady recovery in fiscal 2022, leading to moderation in losses as compared to last year. Debt levels have also reduced to ~Rs. 4400 crore as on April 30, 2023, from ~Rs. 6500 crores as on March 31, 2023, due to prepayments of loans. Also, given its strong market position in the aviation industry and pick-up in traffic seen with easing of lockdowns and travel restrictions, accrual and cash flow have recovered in 9MFY23 (in comparison to fiscal 2020). In addition, AAI has started regular revenue sharing payments from the Mumbai International Airport Ltd and Delhi International Airport Limited.
The financial risk profile is expected to remain healthy despite planned debt-funded capital expenditure (capex) of over Rs 9,000 crore in the next 2 years. CRISIL Ratings will monitor the impact of any larger-than-expected debt-funded capex and working capital requirement on the capital structure.
Weakness: Significant revenue concentration due to limited number of profitable airports Few airports in India are profitable. Moreover, following privatisation of airports in Delhi and Mumbai (the two largest and most profitable airports), all income, other than ATC, now accrues to the respective joint venture companies (JVCs). As per the concession agreements, AAI receives revenue share of around 46% from the Delhi JVC and around 39% from the Mumbai JVC. However, loss of revenue from privatisation is mitigated by concession fees. |
Liquidity: Superior Free cash and equivalent were around ~Rs 4300 crore as on March 31, 2023. AAI also has unutilized working capital facilities of Rs 2,000 crore. |
Outlook: Stable Driven by important to the government as sole authority over ATC activities in the airspace of India. Additionally, accruals and cash position remain strong in comparison to debt servicing requirements over fiscal 2024 |
Rating Sensitivity Factors Downward Factors
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About the Company AAI creates, upgrades, maintains and manages civil aviation infrastructure on the ground and within the territorial boundaries of India. As of February 2022, AAI owns and maintains 133 airports, comprising 100 domestic airports, 10 custom airports and 23 international airports. It provides air traffic management services over the entire airspace in India and adjoining oceans to ensure safety of aircraft operations. It provides air navigation services over 2.8 million square nautical miles of airspace. |
Key Financial Indicators
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||
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This Annexure has been updated on 19-May-2023 in line with the lender-wise facility details as on 21-Mar-2022 received from the rated entity.
Criteria Details
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