Restructuring of the national airline's obligations was agreed this month, six months after an unpaid creditor had forced it into a court-supervised debt moratorium. Garuda had approached various investors and foreign airlines to help increase its capital, according to Kartika Wirjoatmojo, the deputy minister of state-owned enterprises.
Kartika advised journalists that negotiations supervised by the court and in out-of-court settlements meant the company had halved its debt to $5.1 billion from $10.1 billion. It had also negotiated better leasing terms for its aircraft, which had seen widebody rates reduce by 65% and narrowbody aircraft fees reduce by 35%. "Garuda was rarely profitable, because of its low fleet utilisation and high lease costs," the deputy minister commented, "... With an efficient fleet, optimised domestic routes and reduced lease rates, Garuda can make a profit, we believe."
Moving forward Garuda will focus predominately on domestic operations whilst only continuing with the most profitable of international services. A plan that sees its fleet reduce in number from 210 in 2020 to 120 this year.
Kartika indicated the carrier was still looking for international airline partners or investment first to take a key stake in the airline, which would be more attractive now debt had been reduced so much.
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