© Reuters. FILE PHOTO: The Garuda Indonesia logo is depicted on an Airbus A330 parked at the Airbus aircraft manufacturer’s headquarters in Colomiers, near Toulouse, France, on November 15, 2019. REUTERS / Regis Duvignau / File Photo
By Bernadette Christina
JAKARTA (Reuters) – Airline Garuda Indonesia, which defaulted on a $ 500 million sukuk last week, is considering a court-overseen debt rescheduling process and holding talks to reduce its fleet size, company executives said Monday With.
A deputy minister for state enterprises said earlier this month that the state-controlled airline’s total debt is about $ 4.5 billion and negative cash flow of $ 100 million per month due to high costs and low revenues during the coronavirus pandemic Has.
Garuda, which has requested suspension of payments on most of its liabilities, is now considering negotiating its rising debts in or out of court, CEO Irfan Setiaputra said at a parliamentary hearing late Monday.
He noted, however, that while going to a commercial court could result in a faster settlement with creditors, there is a risk of failing to find a solution and the court could declare Garuda bankrupt.
“Garuda needs to have a solid plan because … believers need to be convinced they know that if they sacrifice their demands, Garuda will last longer,” he told MPs in an online streamed hearing where the sound is often muted became the sensitive nature of the information.
The pandemic has forced the airline to suspend some flights, with the average number of passengers per flight also falling significantly. That included unprofitable routes like Jakarta-Osaka and flights to Melbourne and Perth next month, Irfan said. The company is also reviewing an Amsterdam flight.
The airline currently flies only 41 out of 142 aircraft in its fleet, Dony Oskaria, the company’s vice chairman, said in the same hearing. It has returned 20 aircraft to lessors and is negotiating to return seven more, he said.
“The negotiation process is not easy. We want to return 101 planes, but it will take time,” said Dony, adding the company is currently negotiating plans for early termination, rental vacation or hourly pay.
Garuda also presented a five-year business plan to parliament starting in 2022, which includes a target for positive EBITDA and a fleet of 66 aircraft. The plan assumes a turnaround period from the second half of the year.
The airline also wants to keep a workforce based on the number of aircraft it has. Garuda employed more than 7,800 before the pandemic but has now fired 2,300, according to a document presented to MPs.
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