Andrzej Jeziorski/SINGAPORE
Debt-ridden Garuda Indonesia is beginning to look for an additional seven aircraft to replace its ageing Fokker F28 fleet on domestic routes.
According to the carrier, it is likely to acquire additional Boeing 737-300/400/500 aircraft, probably on a wet lease basis. The airline already operates these 737 variants, and this would serve both to modernise the fleet and cut maintenance costs by reducing the number of different types in service.
Garuda has not yet found financing for a fleet renewal, and is still in talks with creditors for final approval of a plan to restructure some of the airline's massive debts. Total liabilities in the second half of last year stood at $1.81 billion, against assets of $758 million.
The airline says it is now looking at opening new routes, including some of those dropped as a result of the Asian financial crisis of 1997. Load factors plunged after the collapse, leading the airline to close 17 international routes and some of its domestic services.
Garuda says that traffic on international and domestic services is now increasing, with average load factors climbing from 54% in 1998 to 69% in the first half of this year, having averaged 68% over the whole of last year. The carrier claims an operating profit of 300 billion rupiah ($30 million)in the first half of this year, compared to a 405 billion rupiah profit for the whole of last year.
The airline is continuing talks with European creditors on a debt restructuring scheme. The Indonesian Government gave its approval in July to a plan to restructure about $1.2 billion in debt, and soon afterwards meetings began between senior Garuda management and French, German and UK Export Credit Agencies over restructuring the airline's biggest single debt of about $610 million.
No principal has been paid since June 1998 on this debt, which covers financing for an Airbus A330 order. Garuda's financial adviser, Deutsche Bank, is suggesting that the debt should be repaid over 16 years instead of the original 10 year arrangement.
Jakarta has backed the German-based bank's plan, along with the issue of five-year convertible bonds to cover a $103 million debt to Bank Mandiri, and another $38 million owed to a state airport operator. The restructuring of a further $460 million owed to local and international banks was also approved.
Source: Flight International
