Garuda Airlines to Re-Schedule Debt Repayments

Garuda Airlines is looking to propose a reschedule in its debt repayments to the European Credit Agency to whom it owes US$794 million.

In desperate need to improve the condition of its balance sheet Garuda is exploring a whole range of options including a business-to-business renegotiation of its debt burden, a conversion of debt to equity and a rescheduling of its outstanding debt burden according to an article in Bali Discovery.

Garuda has been through hard times before and I have no doubt it will recover to its former glory debt-free but when is anyone's guess. Both Bali bombings played a crucial part in the airline accruing debt with tourist staying away from Bali in their droves. This has not only affected Garuda but other domestic airlines as well who would carry tourists to other parts of the archipelago but these airlines have not been affected as dramatically as Garuda's International fleet.

Meanwhile, the Indonesian National Carrier is undertaking dramatic steps to enhance its operational efficiency by cutting operational costs by 10% system-wide rationalizing its international and domestic route system and reducing the types of aircraft it flies.

According to local press report, Garuda is seeking to reduce its debt burden from US$794 million to US$274 via the combination an agreed haircut with ECA and a conversion of outstanding debt to equity.

Garuda has rearranged its flight schedule times also with later departures much to the annoyance of the wiling tourists travelling to the island of Bali. But hey, when you are in paradise then who cares what time of the night you fly out!.