Politics

Creditors demand nearly $14 billion from struggling Garuda Indonesia


Creditors of Indonesia’s struggling flagship airline Garuda Indonesia are seeking about 198 trillion rupiah ($13.9 billion) in claims as part of the carrier’s debt restructuring, Bloomberg News cited court-appointed administrators in the case. The administrators said they received claims from more than 470 creditors by the end of a January 5 deadline. The claims would be checked and verified until January 19, they added. State-controlled Garuda is undergoing a Jakarta court-led debt restructuring after the airline came under pressure from the travel slump amid the Covid-19 pandemic. It said it will restructure both its finances, its fleet and its flights…

Creditors of Indonesia’s struggling flagship airline Garuda Indonesia are seeking about 198 trillion rupiah ($13.9 billion) in claims as part of the carrier’s debt restructuring, Bloomberg News cited court-appointed administrators in the case.

The administrators said they received claims from more than 470 creditors by the end of a January 5 deadline. The claims would be checked and verified until January 19, they added.

State-controlled Garuda is undergoing a Jakarta court-led debt restructuring after the airline came under pressure from the travel slump amid the Covid-19 pandemic. It said it will restructure both its finances, its fleet and its flights network to master the crisis.

Constant negative cash flow during the Covid-19 pandemic

In the restructuring, Garuda has taken steps to buy more time for the repayment of what it stated are an estimated $9.8 billion in outstanding liabilities. The carrier said it has been running on negative cash flow throughout the Covid-19 pandemic.

Among the debt is a $500-million Islamic bond, or sukuk, on which the airline recently defaulted.

An official at the country’s state-owned enterprises ministry said in November last year that Garuda was “technically bankrupt” and is planning to reduce its liabilities by more than 60 per cent through a restructuring process in order to overcome the pandemic. Under the proposal, the company seeks to reduce its liabilities to $3.7 billion from $9.8 billion.

The higher figure presented by the creditors was partially due to some lessors submitting the total and future liabilities of Garuda and not discounting or calculating the present value of those debts, Garuda’s finance director Prasetio told the agency, adding that the carrier would stick to its $9.8 billion of liabilities on its books.



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