Nicholas Ionides and Andrew Doyle/SINGAPORE
Garuda Indonesia is negotiating with Boeing to drop a deferred firm order for six 777-200ERs and take 18 Next Generation 737s instead. The talks are taking place as the carrier struggles to finalise a long-delayed restructuring plan with creditors.
The airline ordered the General Electric GE90-powered 777s in 1996 in a deal that allowed it to cancel orders for Boeing 747-400s. The twinjets were originally due to have been handed over in 2000 but deliveries were deferred until 2004 as a result of the Asian financial crisis of 1997-99.
The Jakarta-based carrier has proposed swapping the six widebodies for 18 737-800s and hopes to structure a deal with Boeing, engine manufacturer GE and its leasing affiliate GE Capital Aviation Services, say sources. The 737s would be delivered in 2003.
Boeing says Garuda's 777 order is "not cancelled". But the airline says it is unlikely to ultimately buy the aircraft, although it claims to be keeping its options open and "we would like to have the aircraft leased instead of purchased, if we take them". Garuda confirms that it is "studying that option" to acquire 18 Next Generation 737s. The carrier has more pressing priorities. It is working to finalise a long-awaited restructuring of more than $1 billion in debt with key creditors.
Garuda said early this year that a majority of creditors had agreed to the restructuring plan and a formal deal should follow. It says: "It is maybe one or two months away. The restructuring has been agreed but right now we are working on administrative and legal details."
The airline has been working on the restructuring since 1998, when it suspended principal payments on much of its debt. Its biggest single obligation is to the export credit agencies of France, Germany and the UK, which are owed $610 million for financing the purchase of six in-service Airbus A330-300s.
Source: Flight International
