National flag carrier Garuda Indonesia will seek a suspension of debt payments to creditors and lessors under a ‘standstill agreement’ in order to avoid bankruptcy, a senior government official said on Thursday, Reuters reported.
The coronavirus pandemic has put the state-controlled airline’s finances under serious strain with a negative cashflow of about $100 million a month and ballooning debt, Kartika Wirjoatmodjo, Indonesia’s deputy minister of state-owned enterprises (SOEs), told a parliamentary hearing.
The carrier needed a “fundamental restructuring” to reduce its debt to around $1 billion to $1.5 billion, from $4.5 billion currently, to continue as a going concern, he said.
“We are appointing legal and financial consultants to begin this process and we must immediately conduct a moratorium (of debt repayments) or a standstill in the near term,” Kartika said.
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