JAKARTADAILY.ID – A high-level government official in Indonesia stated that he has high hopes that after a court ratified a deal between Garuda Indonesia and its creditors for a $9 billion debt restructuring, the national airline will be able to straighten its finances.
The debt restructuring negotiation was ratified by the Central Jakarta district court on Monday, May 27, 2022, in which the debts were agreed to be repackaged.
"We expect what has been achieved can be leveraged as a turning point momentum to ensure the work on improving profitability can run optimally," Kartika Wirjoatmodjo, one of the two deputies to the Minister of State-Owned Enterprises, said in a statement on Tuesday.
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Previously, the controversial deal was delayed after objections by lessors on claims, despite the airline securing most of its creditors' backing on June 17, 2022.
The ratified deal includes agreements by most of Garuda's creditors to take a haircut, or write-down of the remaining of their debt and to be restructured into new bonds and shares.
Some other creditors agreed to see their loan tenure extended without any haircut.
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Garuda Indonesia was hit hard by the Covid-19 pandemic. Coupled with poor corporate management in the past, the flag carrier was forced to request a debt restructuring scheme in December 2021.
Kartika said he expected Garuda's management can accelerate its performance after the restructuring scheme was ratified by the court.
He praised some efforts made by the airline's management to ease the financial burdens, including cutting the costs of airplane rent, debt to equity conversion, a bond issuance, and other operational efficiencies, including by maximizing the profitable routes.
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Garuda Indonesia's President Director Irfan Setiaputra said the management will not waste this momentum to accelerate its operational performance, streamlining its cost structure.
He said in May, after a series of negotiations with its lessors, Garuda managed to book a profit on its balance sheet, even though it has not come back to the level before the pandemics.
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