Moody’s Ratings on Monday called IndiGo’s ongoing crisis credit negative for the country’s largest carrier and warned of potential revenue losses, refund liabilities and penalties.

Moody’s cited “significant lapses in planning, oversight and resource management” as the primary cause of the meltdown.

The rating agency noted that the disruptions coincided with peak winter schedules and culminated in over 1,600 cancellations on 5 December, following over 1,200 cancellations in November that had already left thousands of passengers stranded.

Flight cancellations began on 2 December and continued through Monday, when more than 500 services were scrapped.

Moody’s warned that IndiGo could face substantial financial damage from refunds, compensation to affected customers and potential penalties from the Directorate General of Civil Aviation.

The civil aviation ministry on Sunday said, IndiGo has already paid Rs 610 crore in refunds.

During the crisis, IndiGo’s on time performance plunged to 68 per cent in November from 84 per cent in October.

A system wide reset was carried out on 5 and 6 December.

CEO Pieter Elbers said 1,650 of the airline’s 2,200 daily flights were operational as of Sunday and full restoration was expected by mid December.

Moody’s said the impact on profitability for the fiscal year ending 31 March, 2026, would be negative.

The agency maintained IndiGo’s Baa3 rating with a stable outlook but downgraded the airline’s issuer category score for human capital to 4 from 3 and flagged governance concerns linked to management preparedness.

Moody’s said reputational damage may affect IndiGo’s code sharing arrangements but the quantitative impact remains uncertain as the airline adjusts its operations to comply with the Flight Duty Time Limitation (FDTL) regulations.

The disruptions continued into Monday with the airline cancelling 562 flights from six metro airports, including 150 cancellations in Bengaluru alone.

IndiGo has cancelled 560 of its 2,300 daily flights from major metro hubs. Cancellations at other airports included 76 arrivals and 74 departures in Bengaluru, 83 departures and 60 arrivals in Delhi, 98 cancellations in Mumbai, 112 in Hyderabad, two in Kolkata and 56 in Chennai.

Ahmedabad airport reported 28 cancellations by 2 pm on Monday. Delhi airport alone saw 143 cancellations.

While penalties have not been imposed yet, both MoCA and the DGCA are considering possible action. Leadership continuity has also come under scrutiny, with show cause notices issued to CEO Pieter Elbers and COO Isidro Porqueras.

The DGCA on Monday granted the CEO and Accountable Manager an additional 24 hours to respond to the December 6 notice.

Moody’s said the carrier’s operational model lacked the resilience to absorb changes under the Phase 2 FDTL regulations by the government that came into effect on November 1.

These rules classify any duty between midnight and 6 am as night duty and reduce the permissible number of landings within 24 hours from six to two or three.

The revised norms, introduced to enhance safety and reduce crew fatigue, are among the most stringent globally.

IndiGo secured a temporary exemption from the DGCA for the FDTL rules until 10 February, 2026.

The exemption is subject to mandatory reviews every 15 days. The airline must submit operational and compliance reports that include details on crew utilisation, measures to improve crew availability, operability improvements and revised planning mechanisms.

It must also file a 30 day road map for full compliance that includes timelines for achieving 100 per cent adherence.

The government has set up a four member committee to review the circumstances leading to the disruptions. The panel will examine causes, evaluate manpower planning and rostering under the revised FDTL norms, review compliance gaps, determine accountability for planning failures, assess mitigation steps and monitor restoration measures.

The findings will be submitted to the DGCA within 15 days.