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Creditors approve Garuda's restructuring plan
Garuda Indonesia has won by a landslide a vote on its proposal to restructure Rp 142 trillion ($9 billion) of its liabilities, allowing the flag carrier to avert bankruptcy and live to fight another day.
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Garuda Indonesia CEO Irfan Setiaputra (center) and board of directors members wait for the results of a vote on the carriers’ restructuring proposal at the Central Jakarta District Court on June 17. (Garuda Indonesia/Public Relation team)
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aruda Indonesia has won by a landslide a vote on its proposal to restructure Rp 142 trillion (US$9 billion) of its liabilities, allowing the flag carrier to avert bankruptcy and live to fight another day.
The proposal was approved by more than 95 percent of the creditors and lessors attending – physically or virtually – a poll at the Central Jakarta District Court on Friday, a team of debt suspension case (PKPU) administrators appointed by the court announced, adding that the result would be ratified by the court on Monday.
With the approval, Garuda estimates it can slash its liabilities by between 80 and 81 percent, as the proposal allows the airline to convert its obligations to $825 million in new bonds with maturity periods of nine years and $330 million in new equity. The former was increased from a previously planned $800 million.
In addition, loans from state-owned lenders would be converted to new ones with a maturity of 22 years and an annual interest of 0.1 percent.
The proposal includes many other measures and states that liabilities up to Rp 255 million would be repaid directly.
Different measures will have their own effective implementation dates but no later than Dec. 31, according to the restructuring plan.
Garuda Indonesia CEO Irfan Setiaputra said the airline would direct its focus to domestic passenger and cargo services while being more selective with international flights by choosing only profitable routes. Garuda will also refrain from having too many aircraft types.
