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Garuda might get $231 million capital injection for new planes
With Garuda's current downsizing plans, state-owned air travel holding firm Aviata is worried that aircraft supply will not meet demand between 2022 and 2024.
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New face: Garuda Indonesia unveils its new mask livery for its B737-800 NG fleet. The COVID-19 pandemic has hit the company hard. (Courtesy of/Garuda Indonesia)
N
ational flag carrier Garuda Indonesia is in talks about receiving a Rp 3.3 trillion (US$231 million) state capital injection next year to buy aircraft in expectation of a rebound in air travel demand starting 2022.
Edwin Hidayat Abdullah, who oversees the formation of a state-owned travel holding firm slated to acquire Garuda, said on Thursday that the injection could be done either through a direct investment or partnership scheme.
He said a direct investment entailed Garuda subsidiary Citilink conducting a rights issue, while a partnership entailed the holding firm, PT Aviasi Pariwisata Indonesia (Aviata), buying the aircraft for Citilink.
“The recovery in the aviation sector could be dampened if there is no additional aircraft investment by next year,” Edwin told lawmakers during a hearing with the House of Representatives on Thursday.
Read also: Aviata: Indonesia’s new state-owned travel holding firm
However, Aviata would wait until Garuda concluded negotiations with creditors before making decisions related to the capital injection, Edwin said.
Plummeting air travel demand amid the COVID-19 pandemic has forced Garuda to greatly downsize its fleet, change routes and conduct early retirement to minimize costs.
