DALLAS – Troubled Indonesian flag carrier Garuda Indonesia (GA) has received a capital injection of Rp7.5tr (US$478m) in state aid. The funds will assist with the airline’s recovery process by rebuilding its fleet, assisting with maintaining current aircraft and running its operations.
The payment has been made under the government’s State Capital Investment (PMN) program and is under the proviso that GA meets several specific criteria as part of its restructuring plan. This included the airline pledging back in April that it would use the PMN to bring back grounded airframes rather than paying off outstanding debts.
Garuda’s Transformation Mission
In a statement, the airline’s boss Irfan Setiaputra said, “We would like to thank the government for the realization of the state capital funds and to all of those who supported Garuda’s mission towards transformation.
“We are optimistic that this PMN realization will strengthen Garuda’s steps in accelerating the continuous restructuring process expected to be completed by the end of this year. Surely, it is also an important phase for Garuda’s efforts to raise the national momentum to optimize the aviation industry sector in 2023,” he added.
Restructuring
The airline’s restructuring began in June when GA and its creditors agreed to slash its debt by half to around US$5.1bn. However, this deal was challenged by aircraft lessor Greylag Goose in Australia’s Supreme Court.
Fleet restructuring is also taking place with the goal of operating 66 aircraft instead of the 142 it used before the pandemic. To achieve this, it has been renegotiating outstanding orders with both Airbus and Boeing and discussing possible early termination of aircraft leases.
In September, the airline applied to the US Bankruptcy Court in New York for Chapter 15 bankruptcy protection.
Featured Image: GA Boeing 737-800 (PK-GFJ). Photo: Wilbert Tana/Airways.
