Ministry Of SOEs: Garuda Indonesia Could Go To Bankruptcy If Creditors Rejected Debt Restructuring

Garuda Indonesia aircraft. (Photo: Doc. Garuda Indonesia)

JAKARTA - PT Garuda Indonesia (Persero) Tbk is in the middle of a huge debt problem. Deputy Minister of State-Owned Enterprises Kartika Wirjoatmodjo needs support to save Garuda Indonesia through debt restructuring. He said this step is not without risk.

Kartika said that PT Garuda Indonesia (Persero) was in danger of going out of business or going bankrupt. This is a risk if Garuda Indonesia's debt restructuring program is rejected by creditors.

"Indeed, there is a risk that if the restructuring process results in creditors not agreeing to it or in the end there are many legal demands against Garuda Indonesia, it could not reach the quorum and eventually it could lead to bankruptcy. This is what we are avoiding," he said in a hearing with Commission VI of the Council. Indonesian People's Representative (DPR) at the Parliament Building, Jakarta, Thursday, June 3.

Furthermore, Kartika said that restructuring efforts would take at least 270 days with a long and tiring legal process. In addition, the process will also be carried out by global financial institutions. This is because Garuda Indonesia's creditors come from investors and global banks.

"If Garuda can carry out a mass restructuring with all lessors and Sukuk holders and carry out cost reductions, it is hoped that the costs will decrease by 50 percent or more, Garuda can survive after the restructuring," he said.

In the restructuring process, Kartika said, the government is appointing legal consultants and financial consultants in the near future. While waiting for the restructuring process, shareholders continue to maintain the company's financial flows. In fact, said Kartika, flight delays will also be carried out for less productive routes.

As is known, PT Garuda Indonesia (Persero) Tbk is in the middle of a huge debt problem. However, Garuda Indonesia Independent Commissioner Yenny Zannuba Wahid hopes that the state-owned airline will not go bankrupt.

This was conveyed by Yenny in a tweet on her personal Twitter account, @yennywahid. Until now, the state-owned enterprise (BUMN) in the commercial aviation sector has been hit by a storm of problems.

Yenny stated that her party is working hard so that the company coded as GIAA does not go bankrupt. Garuda Indonesia (GIAA) does have a red report card in financial aspects, including the debt value in 2021 which will reach IDR 70 trillion.

"Many are asking about Garuda. Currently, we are fighting hard so that Garuda does not go bankrupt. The problem with Garuda's legacy is enormous, ranging from corruption cases to inefficient costs," Yenny tweeted on her Twitter account, quoted on Sunday, May 30.