Good News From Deputy Erick Thohir: Even Though It Is Still In Ruins, Garuda Indonesia Is Projected To Recover In 2023 When The Pandemic Subsides

Garuda Indonesia Airlines. (Photo: Wikimedia Commons)

JAKARTA - The Ministry of State-Owned Enterprises (BUMN) projects that the performance of PT Garuda Indonesia Tbk (GIAA) will recover in 2023. However, provided there is no third wave of the COVID-19 pandemic.

Deputy Minister of SOEs II Kartika Wirjoatmodjo explained that he hopes that there will be no third wave and a tightening of community movements, so the state-owned airline's revenue will begin to recover gradually to 120 million US dollars per month in 2022 and 200 million US dollars in 2023.

"If the pandemic gradually improves and tourism starts to rise, in 2023 we will achieve initial revenue," he said during a joint meeting with Commission VI DPR/RI, quoted on Thursday, November 11.

Previously, Tiko, as he is known, has explained a number of reasons that have made Garuda's condition to its current point, none other than the issue of past corruption. Then the COVID-19 pandemic made this full-service airline reach its lowest point with revenues of only US$20 million per month.

In fact, Garuda Indonesia requires operating costs of 130 million-150 million US dollars per month. As a result, Garuda's debt has been piling up with the largest component being the payment of aircraft lease obligations to 32 lessors. As of November, Garuda's debt was reported to have swelled to US$9.8 billion or almost Rp140 trillion.

This national airline is also undergoing various restructuring options to reduce the amount of debt. Tiko targets the restructuring process to be successful in the second quarter of 2022. If the options taken pay off, Garuda can reduce operating costs to US$ 80 million per month.

"While Garuda's revenue in December was 70 million US dollars. So hopefully in May and June 2022, Garuda can reach the break event point and start to grow positively," said Tiko.

President Director of Garuda Indonesia Irfan Setiaputra said the company chose to resolve the issue of negotiations with the lessor within the court which took 270 days to complete the restructuring.

The in-court settlement, he said, would be the best because all parties would sit down together to think about an agreement. Irfan said the company has submitted a restructuring proposal to the lessor. In its proposal, Garuda offers three settlements of arrears.

First, Garuda asked for a haircut or a reduction in the debt burden. Second, during the one or two-year recovery period or when the movement is not yet normal, Garuda will pay for the aircraft rental using a pay-to-use scheme.

This means that Garuda will only pay the rent if the aircraft is used based on its operating hours. Third, if the pandemic is over in two years, it will return to rent based on market prices.