Garuda upbeat over debt talks with creditors<\/p>\n
JAKARTA (JP): National flag carrier Garuda Indonesia said on
\nThursday its debt restructuring proposal was received positively
\nby its foreign creditors.<\/p>\n
The airline's vice president for corporate communications,
\nPujobroto, said results from the first series of meetings with
\ncreditors in Singapore and London were very encouraging.<\/p>\n
The meetings did not touch on the detailed issues of the debt
\nrestructuring proposal, but the creditors agreement to continue
\nthe talks in later meetings was very important for Garuda, he
\nsaid.<\/p>\n
Garuda executives met creditors in Singapore and London last
\nweek to present a five-year program to restructure the airline's
\nUS$1.1 billion debt.<\/p>\n
\"The presentation is an important step toward the continuing
\nprocess of the debt restructuring program. We did not make any
\nproposals on how the debts would be settled during the
\npresentation, but another meeting will soon be set up to
\nspecifically discuss this matter,\" he told The Jakarta Post.<\/p>\n
Garuda has been engaged in massive corporate restructuring
\nsince the country began to emerge from the economic crisis in
\nlate-1998. The airline suffered $46.1 million in losses in 1998
\npartly due to the crisis.<\/p>\n
As part of its restructuring, Garuda asked German Deustchebank
\nto advise it on its finances and German airline Lufthansa to help
\nthe company improve its management and service.<\/p>\n
Separately, Garuda vice president of commerce Bachrul Hakim
\nsaid the airline was counting on the debt restructuring program
\nto further repair its financial condition.<\/p>\n
\"If the debt talks fail, we'll be in deeper trouble,\" he told
\nthe Post on the sidelines of a seminar on tourism hosted by
\nBerita Ekonomi magazine.<\/p>\n
He said Garuda cut a number of its routes, including to most
\ndestinations in the United States and Europe, as well as to a
\nnumber of Asian cities, including Seoul, Taipei, Guang Zou and
\nFukuoka. This reduction of flights is part of the airline's new
\nbusiness plan.<\/p>\n
\"We cut over 40 percent of our international flights and lower
\nthan 40 domestic flights,\" he said.<\/p>\n
He said reducing the number of flights and cutting
\nunprofitable routes was part of Garuda's program of consolidation
\nand rehabilitation.<\/p>\n
He said the economic crisis not only compelled Garuda to
\ndismiss some of its employees, but it also had to reduce the size
\nof its fleet by selling or canceling the lease on some aircraft.<\/p>\n
Pujobroto said Garuda sold around five of its Airbus B4
\naircraft this year.<\/p>\n
Bachrul, however, said he was optimistic Garuda would soon
\nemerge from its financial difficulties because the company had
\nbegun to show signs of recovery, including an increased load
\nfactor.<\/p>\n
\"We're doing very good this year. We had an overall average
\nload factor of over 80 percent throughout the first half of this
\nyear, a level we are sure will remain stable until the end of the
\nyear,\" he said, adding that Garuda had a load factor of around 60
\npercent in 1998.<\/p>\n
He also said Garuda planned to resume flights to Korea and
\nTaiwan as soon as the company's financial situation recovered.
\n\"We'll soon resume the flights, but not this year.\"<\/p>\n
The carrier currently has 44 aircraft, comprising three Boeing
\n747-400s, four B747-200s, nine B737-300s, seven B737-400s, five
\nB737-500s, six Airbus 330-300s, five DC-10-30s and five Fokker
\n28s. In the past, the airline had more than 50 aircraft.<\/p>\n
Garuda expects a profit of $4.5 million this year and $5
\nmillion in 2000. (cst)<\/p>",
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