Troubled air carrier Garuda Indonesia has halved its debt to $5.1bn from $10.1bn after its court supervised restructuring. Earlier this month, creditors approved restructuring proposals with a majority vote. The company renegotiated the terms of aircraft orders and leasing contracts and managed to cut lease rates for wide-body aircraft by at least 65% and for narrow-body aircraft by 35%. Some lessors also agreed to vary lease payment until December 2023 as per the time aircraft were used. The government expects that Garuda can be profitable going ahead due to significant debt reduction and cuts in leasing costs. The government will infuse capital in Garuda later this year through a rights issue and then the company will conduct a second rights issue by inviting strategic partners. Kartika Wirjoatmojo, deputy minister of state-owned enterprises said, “With an efficient fleet, optimized domestic routes, and reduced lease rates, Garuda can make a profit. The carrier would still face challenges in managing costs amid soaring fuel prices, but it expected to turn its operating income positive after reporting negative cash flow each month during the COVID-19 pandemic”.
Garuda’s dollar bonds were trading higher with its 5.95% 2023s down over 2.16 points to 21.25 cents to a dollar.
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