Indonesia to help national airline with $518 million cash injection
Indonesia’s parliament on April 22 approved the government’s plan to raise the capital of flagship carrier Garuda Indonesia by 7.5 trillion rupiah ($518.31 million) this year, provided the carrier reaches a debt settlement with its creditors, according to local media reports.
The decision was made by a committee of lawmakers tasked to implement the government’s strategy to save the debt-laden airline.
“We have all concurred that rescuing Garuda Indonesia is a must,” Erick Thohir, Indonesia’s minister for state-owned enterprises, said.
Thohir affirmed that the ministry and Garuda’s management are committed to implementing recommendations made by the committee, which include improving corporate governance with a clear timeline and benchmarks in order to reform the carrier.
Garuda’s chief executive Irfan Setiaputra thanked the lawmakers for the decision, describing it as an “important part of Garuda’s restructuring.”
$14 billion claimed by creditors
Garuda has been hit hard by the Covid-19 pandemic which brought air travel almost to a halt and deepened the airline’s existing problem such as ineffective management, corruption and poor competitiveness.
As of January 2022, creditors of the struggling state-controlled airline are claiming nearly $14 billion in liabilities amid the carrier’s debt restructuring which has been extended twice.
Billionaire businessman may come to the rescue
Garuda has been trying to renegotiate its debt with creditors under a court-led process since the end of last year. The airline says it has “only” a total of $9.8 billion in liabilities on its books and said that there was “a potential involvement of a strategic investor to support the restructuring,” without naming the investor.
According to earlier media reports, Indonesian billionaire businessman Chairul Tanjung, who is Garuda’s second-biggest shareholder behind the government of Indonesia through his company PT Trans Airways, a subsidiary of Tanjung’s conglomerate CT Group, has said he wants to top-up his stake in the airline which currently stands at 28.3 per cent.
The court has given Garuda until May 20 to finish verification and negotiations with creditors.
Indonesia’s parliament on April 22 approved the government’s plan to raise the capital of flagship carrier Garuda Indonesia by 7.5 trillion rupiah ($518.31 million) this year, provided the carrier reaches a debt settlement with its creditors, according to local media reports. The decision was made by a committee of lawmakers tasked to implement the government’s strategy to save the debt-laden airline. “We have all concurred that rescuing Garuda Indonesia is a must,” Erick Thohir, Indonesia’s minister for state-owned enterprises, said. Thohir affirmed that the ministry and Garuda’s management are committed to implementing recommendations made by the committee, which include improving...
Indonesia’s parliament on April 22 approved the government’s plan to raise the capital of flagship carrier Garuda Indonesia by 7.5 trillion rupiah ($518.31 million) this year, provided the carrier reaches a debt settlement with its creditors, according to local media reports.
The decision was made by a committee of lawmakers tasked to implement the government’s strategy to save the debt-laden airline.
“We have all concurred that rescuing Garuda Indonesia is a must,” Erick Thohir, Indonesia’s minister for state-owned enterprises, said.
Thohir affirmed that the ministry and Garuda’s management are committed to implementing recommendations made by the committee, which include improving corporate governance with a clear timeline and benchmarks in order to reform the carrier.
Garuda’s chief executive Irfan Setiaputra thanked the lawmakers for the decision, describing it as an “important part of Garuda’s restructuring.”
$14 billion claimed by creditors
Garuda has been hit hard by the Covid-19 pandemic which brought air travel almost to a halt and deepened the airline’s existing problem such as ineffective management, corruption and poor competitiveness.
As of January 2022, creditors of the struggling state-controlled airline are claiming nearly $14 billion in liabilities amid the carrier’s debt restructuring which has been extended twice.
Billionaire businessman may come to the rescue
Garuda has been trying to renegotiate its debt with creditors under a court-led process since the end of last year. The airline says it has “only” a total of $9.8 billion in liabilities on its books and said that there was “a potential involvement of a strategic investor to support the restructuring,” without naming the investor.
According to earlier media reports, Indonesian billionaire businessman Chairul Tanjung, who is Garuda’s second-biggest shareholder behind the government of Indonesia through his company PT Trans Airways, a subsidiary of Tanjung’s conglomerate CT Group, has said he wants to top-up his stake in the airline which currently stands at 28.3 per cent.
The court has given Garuda until May 20 to finish verification and negotiations with creditors.
