JAKARTA - PT Garuda Indonesia (Persero) Tbk (GIAA) is on the verge of bankruptcy. Not only bearing debts of up to IDR 70 trillion but Garuda Indonesia's condition was also worsened by the declining passenger occupancy due to the COVID-19 pandemic. Garuda suffered a loss of USD 100 million or approximately IDR 1.4 trillion per month (assuming IDR 14.300 per dollar).
Regarding the condition of Garuda Indonesia, the Chairman of Commission VI of Indonesian House of Representatives (DPR RI), Faisol Riza, said that the DPR, in this case, Commission VI, will summon the Garuda's board of directors and the Minister of SOEs Erick Thohir in the near future.
The summons for the board of directors was motivated by protests from people's representatives in Commission VI of the DPR RI during a meeting with Erick Thohir regarding the condition of Garuda.
"Now let's focus on the discussion regarding the Work Plan and Budget of the Ministry of SOEs for Fiscal Year 2022. We will hold a discussion regarding Garuda in the near future", said Faisol Riza while chairing a working meeting, Thursday, June 3.
Garuda suffers a loss of IDR 1.4 trillion per month
Company officials also have to rack their brains in order to maintain financial flows in order to maintain the business in its current condition. This includes the Ministry of State-Owned Enterprises (BUMN) as a shareholder.
Deputy Minister of State-Owned Enterprises (BUMN) Kartika Wirjoatmodjo said that in a month Garuda's operating costs amounted to USD 150 million. While the revenue only reached USD 50 million.
"So every month we lose USD 100 million (IDR 1.4 trillion). It is no longer possible for us to continue in this condition. Indeed, we hope for support from members of the board to enter into the heavy restructuring process", he said in a hearing meeting with the Commission VI of the House of Representatives (DPR RI) at the Parliament Building, Jakarta, Thursday, June 3.
Tiko as he is familiarly called said that the restructuring process would take at least 270 days with a long and tiring legal process. In addition, he said, the process is also carried out internationally because the creditors are investors or world banks.
"Indeed, there is a risk that if the restructuring process results in the creditors not agreeing to it or eventually many legal claims against Garuda Indonesia, it could not reach the quorum and eventually lead to bankruptcy. This is what we are avoiding", he said.
To launch the restructuring, said Tiko, the government is appointing legal consultants and financial consultants in the near future. While waiting for the restructuring process, to maintain financial flows a moratorium or flight delays will be carried out. Especially for less productive routes.
Tiko said that if the restructuring process runs smoothly and diverts operational costs, it can save expenses by more than 50 percent. According to him, this step can also increase the length of the company's breath so that the condition of the aviation industry becomes more conducive.
Targeting restructuring value at IDR 21.4 trillion
The Ministry of State-Owned Enterprises (BUMN) targets the debt restructuring value of PT Garuda Indonesia (Persero) Tbk, to reach USD 1.5 billion or approximately IDR 21.4 trillion (Exchange rate of IDR 14.400 per US dollar). As is known, GIAA's debt is recorded at USD 4.5 billion or close to IDR 70 trillion.
SEE ALSO:
Deputy Minister of State-Owned Enterprises Kartiko Wirjoatmodjo said that Garuda's main problems in the past were due to rentals that exceeded the cost or reasonable expenses and too many types of aircraft.
As is known, Garuda Indonesia has a number of fleets ranging from Boeing 737, Boeing 777, Airbus A320, A330, to ATR and Bombardier aircraft.
"Because there are so many planes, efficiency becomes a problem", he said.
Moreover, said Kartika, many routes flown by Garuda are not profitable. According to him, actually, in 2019 Garuda was profitable but was hit by a pandemic in 2020.
Not only that, according to Kartika, but there is a new problem, namely the change in the recognition of obligations following the statement of financial accounting standards (PSAK). Where the operational list which is recorded as opex is then recorded as debt.
"Debt that was previously IDR 20 trillion swelled to IDR 70 trillion. Indeed, according to PSAK, it is required to be listed as a liability", he said.
Tiko, as Kartika Wirjoatmodjo is familiarly called, said, simply put, if Garuda's EBITDA does not reach USD 200 to USD 250 million, then the normal financial condition must have a maximum ratio of 6 times. So, about USD 250 million multiplied by 6 becomes 1.5 billion dollars.
"On top of that, Garuda cannot be a going concern, because it will not be able to pay its debts", he said.
The English, Chinese, Japanese, Arabic, and French versions are automatically generated by the AI. So there may still be inaccuracies in translating, please always see Indonesian as our main language. (system supported by DigitalSiber.id)
