Indonesia’s state-owned carrier Garuda Indonesia is struggling to pay its debts and is trying to reach agreement with creditors.
Garuda executives met in London with European export credit agencies (ECAs) on 2 December to discuss “principal payments due at the end of the year and beyond”, says Garuda.
“Garuda’s current situation makes payment of such amounts extremely difficult and we are working with our creditors to resolve this in a manner that is fair and equitable to all stakeholders,” the airline adds. “In the meantime, we will continue to pay regular contractual interest requirements.
“Negative factors affecting Garuda’s performance include record fuel prices, the weakening of the rupiah for a company that has rupiah revenue and US dollar expenses, increasing interest rates and events like the Bali bombing in October 2005.”
The airline held meetings in Singapore on 30 November “with holders of its floating rate notes” that are denominated in US dollars and Indonesian rupiah. On 29 November executives met in Jakarta with holders of its rupiah-denominated debt.
The chairman of Garuda’s board of commissioners, Abdulgani, says: “Garuda will ensure discussions with financial creditors do not adversely impact operations, customers or service. We plan to pay our trade creditors, including aircraft operating lessors, so operations can continue and revenue generation is maximised.”
Chief executive Emirsyah Satar adds: “Garuda’s first priority at this time is our operations and allowing time for working capital to rebuild to support our operations.”
Garuda disclosed in September that it owes European creditors $519 million, mostly relating to financing for its Airbus A330 purchases.
Source: Flight International
