Indonesia’s parliament on April 22 approved a government plan to raise 7.5 trillion rupiah ($518.31 million) in capital from flagship carrier Garuda Indonesia this year, local media reported, if the airline and its partners Creditors reach a debt settlement. The decision was made by a committee of lawmakers tasked with implementing the government’s strategy to rescue the indebted airline. “We all agree that saving Garuda Indonesia is a must,” said Eric Tohir, Indonesia’s minister of state-owned enterprises. ‘Improving corporate governance’ Thohir confirms that the management of the Ministry and Garuda are committed to implementing the recommendations made by the committee,…
Indonesia’s parliament on April 22 approved a government plan to raise 7.5 trillion rupiah ($518.31 million) in capital from flagship carrier Garuda Indonesia this year, local media reported, if the airline and its partners Creditors reach a debt settlement.
The decision was made by a committee of lawmakers tasked with implementing the government’s strategy to rescue the indebted airline.
“We all agree that saving Garuda Indonesia is a must,” said Eric Tohir, Indonesia’s minister of state-owned enterprises.
“Improving Corporate Governance”
Thohir confirmed that the ministry and Garuda’s management are committed to implementing the committee’s recommendations, which include improving corporate governance with clear timelines and benchmarks to reform the carrier.
Garuda’s chief executive, Irfan Setiaputra, thanked the lawmakers for the decision, calling it “an important part of Garuda’s restructuring.”
Garuda has been hit hard by the Covid-19 pandemic, which has brought air travel to a near halt and deepened the airline’s existing problems such as management inefficiencies, corruption and poor competitiveness.
$14 billion in debt demanded by creditors
As of January 2022, creditors of the troubled state-owned airline were claim The carrier’s debt restructuring has been extended twice, with liabilities of nearly $14 billion.
Garuda has been trying to renegotiate its debts with creditors in a court-led process since late last year. The airline said it had “only” debt totaling $9.8 billion on its books and said “strategic investors may be involved in supporting the restructuring,” without naming the investors.
Billionaire businessman may come to the rescue
Indonesian billionaire businessman Chairul Tanjung, the second-largest shareholder after the Indonesian government through his company PT Trans Airways, a subsidiary of Tanjung’s CT Group, has said he wants to increase his stake in Garuda, according to media reports. Airlines, currently at 28.3%.
The court has given Garuda until May 20 to complete verification and negotiations with creditors.
