Lawmakers oppose bankruptcy or liquidation of Garuda Indonesia | New
Indonesian lawmakers have expressed opposition to bankruptcy or liquidation of ailing national carrier Garuda indonesia during a parliamentary hearing on June 21, as airline executives revealed further details of the downsizing of its operations.
Nyat Kadir, member of the Indonesian House of Representatives, said that “bankruptcy or liquidation options were not the right choice for Garuda indonesia”.
Another member of the House of Representatives, Rafli, adds that Garuda’s financial problems “must be resolved immediately so that the state-owned company does not go bankrupt.”
“[W]We need to know that Garuda’s losses aren’t just during the pandemic. Today, it can no longer be contained, the swelling (the debt) is extraordinary, ”he says.
Garuda’s current debt of 70 trillion rupees ($ 4.9 billion) is expected to continue to grow by 1 trillion rupees each month amid the pandemic, with the “biggest burden” coming from lease payments, according to Rafli.
During the hearing, Garuda Deputy General Manager Dony Oskaria explained that due to current market demand, the airline only flies 41 aircraft and intends to return the remaining 101 aircraft.
According to him, Garuda currently generates $ 6-7 million in revenue per month, which is enough to maintain a fleet of 41 aircraft and cover operating expenses.
He attributes Garuda’s current losses to aircraft lease payments, saying “our losses are in fact purely due to previously leased aircraft which are underutilized assets.”
So far, he says Garuda has returned 20 planes to lessors and has negotiated to return seven more.
“We hope that the plane will be returned soon,” he continues, adding that the airline is seeking to terminate leases early, terminations or hourly leases.
The airline has renegotiated with lessors to reduce rental prices by about 30% across the board, he says, and is currently paying $ 1.5 million a month in leases.
According to data from Cirium fleets, Garuda indonesia currently has 66 aircraft in service – nearly half of which are Boeing 737-800s – and 76 other units in storage.
Giving an overview of the airline’s current operations, Managing Director Irfan Setiaputra states that “it is impossible for [Garuda] be profitable in the future on the basis of existing conditions.
As such, it intends to stop its Melbourne, Perth and Osaka services in July, while revising the routes from Jakarta to Amsterdam, Kuala Lumpur and Sydney, as well as reducing the flight frequencies on its route from Singapore and monitoring its Seoul service.
Garuda is currently implementing several rescue options.
It comes as Garuda defaulted on his $ 500 million sukuk, which was due on June 17 after a two-week grace period expired.
The following day, the Indonesian Stock Exchange suspended trading in Garuda’s shares until further notice.