Garuda on the verge of bankruptcy
Jakarta. National carrier Garuda Indonesia could go bankrupt amid inflated debt and financial hardship due to the devastating impact of the Covid-19 pandemic.
According to media reports on Sunday, the government has prepared all possible contingencies for Garuda, including liquidation and his replacement by charter airline Pelita Air Service if the ongoing rescue measures are unsuccessful.
“If we find ourselves in a stalemate, we will close [Garuda] because it is impossible to inject more money from the state given the massive indebtedness of the company, ”Antara Kartiko Wirjoatmodjo, deputy minister of public enterprises, told the news agency.
He said Garuda is currently negotiating with lenders and dozens of aircraft lessors in his attempts to restructure debts.
Even if Garuda can stabilize its financial conditions, it is almost certain that the company will no longer be able to serve long-haul flights in the future, Kartiko added.
According to Garuda’s financial results in June, the company is in debt of $ 4.9 billion and the charge has increased by 1 trillion rupees ($ 70 million) each month due to the late payment of the loan, a reported the Kompas news site.
Before the pandemic, Garuda had recorded a profit of around 100 billion rupees in 2019, but in the third quarter of 2020, he suffered a massive loss of 15 trillion rupees.
The website also reported that the government had prepared Pelita Air Service, a subsidiary of state-owned oil company Pertamina, to serve domestic flights if Garuda files for bankruptcy.
State Enterprise Minister Erick Thohir said earlier that Garuda had leased its fleet to at least 36 aircraft rental companies, some of whom had been involved in “corrupt practices” with Garuda’s former management.
Garuda has faced a number of civil lawsuits from landlords for inability to pay rent.
Garuda General Secretary Mitra Piranti said in a letter to the Indonesia Stock Exchange that the company “continues to take strategic steps to accelerate business recovery with a focus on improving the core performance of the company. ‘business”.
The return of tourism activity increases optimism for the future of the company, added Mitra.
“In addition, we continue to negotiate and communicate with all creditors to achieve the best debt settlement and restructuring that will improve the fundamental performance of the business,” he said.