Garuda needs 35 years to clear debts<\/p>\n
JAKARTA (JP): Flag carrier Garuda Indonesia needs at least 35
\nyears to fully repay all of its US$1.8 billion debts, the
\nairline's president said on Thursday.<\/p>\n
Speaking at a hearing with members of the House of
\nRepresentatives (DPR), Abdulgani said the economic crisis, which
\npeaked in late 1997 and early 1998, had caused the airline to
\nsuffer a negative equity of $310 million.<\/p>\n
He acknowledged that the ongoing restructuring program for the
\nairline's debts, finances and operations had resulted in some
\nimprovement on the balance sheets and this would result in a cash
\nflow of $234 million between 1999 and 2004.<\/p>\n
But with the cash flow level and the negative position of its
\nequity, the airline would still need about 35 years to fully
\nrepay its huge debt, he said.<\/p>\n
\"Under the financial condition, Garuda has legally been
\ncategorized bankrupt, and as a consequence, the government should
\ntake over all of its obligations,\" he told the House Commission
\nIV for infrastructure and transportation affairs in the hearing.<\/p>\n
He said the government had agreed to guarantee some of the
\nairline's debts and the commitment helped the process of debt
\nnegotiations with creditors.<\/p>\n
Garuda's outstanding debts of $1.8 billion includes $610
\nmillion in airplane leasing fees to the European Credit Agency
\n(ECA), a consortium of financing institutions from Britain,
\nFrance and Germany, $601 million in commercial debts and $420
\nmillion in airplane leasing fees to U.S. Exim Bank.<\/p>\n
Abdulgani said the government agreed last year to take over
\nGaruda's obligations to pay the $420 million to Exim Bank.<\/p>\n
Garuda is currently undertaking active negotiations with the
\nconsortium to reschedule some $610 million it owed to the agency
\nfor leasing six Airbus 330-300s.<\/p>\n
\"We expect to sign the agreement in April. ECA has principally
\nagreed to reschedule the debt repayment term from 12 years to 16
\nyears, but it demands the government provide a guarantee worth
\n$100 million and to enhance Garuda's capital,\" he said.<\/p>\n
He said the $100 million guarantee was currently being
\nprepared by state-owned Bank Mandiri.<\/p>\n
He said Garuda would also propose creditors to reschedule the
\ncoupon payment of its commercial papers to eight years and to
\nallow the airline to buy back some of the notes at discounts.<\/p>\n
\"Under such a program, we hope to be able to reduce the $1.8
\nbillion outstanding debt to $550 million in 2003,\" he added.<\/p>\n
Abdulgani said the restructuring program made a positive
\nresult to the company's 1999 balance sheet, which showed a net
\nprofit of Rp 572 billion, the first since 1990.<\/p>\n
Garuda suffered a net loss of Rp 2.33 trillion in 1998, which
\nwas worse than the Rp 1.28 trillion net loss it endured in 1997
\nand Rp 360 billion in 1996, he said.<\/p>\n
\"Last year definitely was a spectacular turnaround for Garuda,
\nboth in terms of financial and service operation,\" he said.<\/p>\n
He said Garuda had also performed better in terms of load
\nfactor, revenue per seat per kilometer and on-time performance
\nthis year, due to the advice it received from its two
\nconsultants.<\/p>\n
Abdulgani said Garuda had increased its operating revenue to
\nRp 7.12 trillion last year from Rp 4.51 trillion in 1998.<\/p>\n
He also said that the airline, which used to be criticized for
\nits delayed schedule, had improved its on-time performance to
\nrecord an average of 88 percent in 1999, well above the required
\nstandard of 85 percent set by the Association of Asia Pacific
\nAirlines.<\/p>\n
Abdulgani said the improved operational and financial
\ncondition was expected to help spur the company's debt
\nrestructuring efforts.<\/p>\n
He said the company's financial advisor, Deutsche Bank, had
\nestimated that Garuda would have a net value of about $1.1
\nbillion in 2003. (cst)'<\/p>",
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