Garuda Indonesia On The Verge Of Bankruptcy, Aviation Observer: Government Is Slow To Save

Garuda Indonesia aircraft. (Photo: Wikimedia Commons)

JAKARTA - The COVID-19 pandemic has an impact on all lines of life. One of them is the transportation sector, which is heavily affected by restrictions on activities.

One of those who feel the impact of the pandemic is Garuda Indonesia. However, the condition of this national airline was exacerbated by past burdens, which made Garuda Indonesia on the verge of bankruptcy.

Aviation observer Alvin Lie said the government seemed slow in resolving the financial problems that befell the state-owned airline PT Garuda Indonesia (GIAA).

Furthermore, Alvin said this slow step made matters more complicated and the debt burden owned by Garuda Indonesia increased. As is known, Garuda Indonesia was in debt up to Rp70 trillion. Where the debt continues to increase by IDR 1 trillion every month.

"The government already has a plan, whatever has been planned can be carried out quickly. Don't keep the plan passing every day, Garuda Indonesia's burden will increase," he told reporters, Thursday, August 12.

Alvin assessed that the efforts made by Garuda management in rescuing the company were appropriate. These include returning non-operating aircraft to the lessor and restructuring debt.

Even so, Alvin once again highlighted the speed of the realization of the policies taken. According to him, the minus income forced the company to restructure.

Moreover, at this time, said Alvin, the aviation industry during the outbreak of the COVID-19 pandemic has still not recovered 100 percent. Although Indonesia provides many domestic routes, this condition does not help improve airline performance during the COVID-19 pandemic.

"As long as there is a pandemic, how many routes will there be if there are no humans going, it's useless," he said.

Not only that, said Alvin, vaccination requirements for traveling are also one of the obstacles for airlines to improve performance. This is because only 20 percent of the Indonesian people have been vaccinated and 80 percent have not.

"This further reduces the market," he said.

Unions ask for Erick Thohir's support to save Garuda

Previously, the Joint Union (Sekber) of the United Garuda Indonesia requested support from the Minister of State-Owned Enterprises (BUMN) SOE Erick Thohir in order to save the airline PT Garuda Indonesia (Persero) Tbk from financial difficulties. According to them, this national airline is facing two main problems that must be a concern for decision makers.

Garuda Indonesia Bersatu Secretary Coordinator, Tomy Tampatty said the first problem was about finances, especially the large debt coupled with declining operational performance as a result of the impact of COVID-19.

"Second is a fundamental business problem that needs to be reorganized and managed optimally in order to optimize revenue," he said in a written statement received by VOI, Tuesday, August 10.

Because of that, said Tomy, people who really understand the aviation business are needed. According to him, management made a mistake in assuming that Garuda Indonesia's problems were only financial problems, including debt restructuring as its main pillar. But it has not touched the root of the problem and tends to move short-term problems into long-term problems.

"In fact, business fundamentals for profit creation are far more important which have been neglected, such as the accuracy in choosing the production equipment, the accuracy in choosing the route to be flown, and the accuracy of the people process technology that is carried out so that the business becomes profitable," he said.