Image: Reuters Berita 24 English - Garuda Indonesia 's debt has been cut in half, and the airline's costs for renting planes have al...
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| Image: Reuters |
Berita 24 English - Garuda Indonesia's debt has been cut in half, and the airline's costs for renting planes have also gone down by the same amount, the Indonesian government said on Tuesday.
Kartika Wirjoatmojo, the deputy minister of state-owned enterprises, told reporters that the company had tried to get more money by talking to investors and foreign airlines.
This month, the airline agreed to restructure its debts, six months after a creditor who hadn't been paid forced it to file for a court-supervised debt moratorium.
Kartika said that Garuda's debt had been cut in half through negotiations overseen by the court and deals made outside of court. It had gone from $10.1 billion to $5.1 billion.
The company has also changed the terms of orders for aeroplanes and leases. It used to pay unusually high rents for aeroplanes.
During the restructuring process, Kartika said, Garuda was able to cut the lease rates for wide-body aircraft by at least 65% and for narrow-body aircraft by 35%.
Some lessors also agreed that, until December 2023, lease payments would change based on how long an aeroplane was used.
"Garuda rarely made money because it had a small fleet and high lease costs," the deputy minister said. "...We think Garuda can make money if it has a good fleet, good domestic routes, and lower lease rates."
He said that the carrier would still have trouble keeping costs under control because of rising fuel prices, but it expected to start making money after losing money every month during the COVID-19 pandemic.
The deputy minister said again that Garuda's plan is to focus on domestic routes and only keep international services that make money.
Including the low-cost unit Citilink, the Garuda group would have 120 planes, which is less than the 210 it had in 2020.
The government has said that it will increase Garuda's capital through a rights issue later this year. The company will then do a second rights issue and ask a strategic partner to invest in it.
Kartika said that for the second rights issue, Garuda talked to international airlines and financial investors.
He said, "We think that investors will have a lot to gain from our huge domestic market."
A filing with the stock exchange shows that as of last month, the government owned 60.54 percent of Garuda's shares.
