NICHOLAS IONIDES / BALI
Courts in Singapore and the UK have approved Garuda Indonesia's debt repayment plans, successfully ending the carrier's three-year struggle to manage debts of $1.6 billion. Most creditors had already agreed to give Garuda more time.
Garuda will repay $610 million owed to European export credit agencies over 16 years, instead of 12 years. Garuda has not made principal payments on this debt since mid-1998, although it has been making interest payments.
A further $320 million in promissory notes will be repaid over the next seven years, the company says. This debt is long overdue, and as part of the restructuring deal the unsecured creditors will receive a 15% payout in December on the principal. The Indonesian Government holds most of the rest of Garuda's debt, and has agreed to a debt-for-equity swap.
With the debt problem dealt with, Garuda can turn to expansion again.
During the 1997-99 Asia-Pacific economic downturn it was forced to reduce its fleet to 42 aircraft from 58, scrap 16 international routes and cut its employee base to 9,600 from 13,000.
Garuda has since brought its fleet back up to 44 aircraft, including Boeing 737s, 747-200s, 747-400s, Airbus A330s, McDonnell Douglas DC-10s, and Fokker F28s, and re-launched services to a handful of dropped destinations.
Source: Flight International
