/2021/05/23/2080313483p.jpg)
GARUDA INDONESIA - JAKARTA. The Indonesian government still favours a court supervised debt restructuring process for flag carrier Garuda Indonesia while opening the possibility of getting new investors into the company, a deputy cabinet minister said on Tuesday.
Garuda is seeking to reduce its total debt to $3.69 billion from $9.78 billion in September and a court-led solution will be a faster option, Kartika Wirjoatmodjo, deputy minister of state-owned enterprises said in a parliamentary hearing.
The company's finances deteriorated as the coronavirus pandemic disrupted global travel.
Last month a Jakarta court rejected a so-called PKPU request by cargo company PT My Indo Airlines (MYIA) to restructure Garuda's debt, saying it failed to meet legal requirements.
A second creditor has since filed a separate PKPU request in Jakarta against Garuda, the company said.
Read Also: Copper prices retreat as China property market woes weigh
Kartika said renegotiations with dozens of creditors, critical in reducing its leasing and interest rate costs, will take years to conclude while an accord reached in an Indonesian court would bind all of Garuda's creditors.
"If this legal process moves forward, we can slash Garuda's monthly costs ... the hope is by May to June 2022, Garuda can break even," he said, although he added there was a risk of bankruptcy if the creditors voted to reject Garuda's settlement plan.
He said Garuda's operations have improved in the past month as the Indonesian government eases coronavirus-linked travel restrictions. Kartika expects Garuda to post $120 million in revenue next year, assuming there will be no retightening of COVID-19 restrictions.
Post-debt renegotiation, Garuda is likely to require fresh capital to finance its operations, which Kartika said could come from new investors, potentially reducing the government's 60% controlling stake in the airline.
"We are open to the option of new shareholders and here we ask if we are allowed for government ownership to be diluted, maybe even to no longer be the majority holder," he said at the parliamentary hearing.
Read Also: Saudi Q3 GDP growth at 6.8%, highest since 2012
