Garuda pays $105.3m in debts, interest

Garuda pays $105.3m in debts, interest

Rendi A. Witular, The Jakarta Post, Jakarta

Despite its financial difficulties, national flag carrier
Garuda Indonesia has managed to meet its financial obligations
for 2004 to international creditors.

Garuda said in a statement recently that it had paid a total
of US$105.3 million in debt installment and interest due on Dec.
28.

"With the payment of the installment, Garuda's total debt and
interest have been reduced to $827.9 million," said the carrier.

Since it signed debt restructuring agreements with its
creditors in November 2001, the airline has paid a total of
$454.7 million in installments and interest to creditors, the
company said.

Some $627 million of Garuda's remaining debts is owed to an
international consortium consisting of creditors in the United
Kingdom, Germany and France. The remaining $200 million is in the
form of promissory notes, which are due in 2007.

Garuda defaulted on more than $1.1 billion in debts to
international creditors during the Asian financial crisis that
started in late 1997. Creditors then agreed to extend the payment
period until 2010.

Garuda is scheduled to pay $111.1 million of its remaining
debts and interest next year, $112.8 million in 2006, $108
million in 2007, $120.3 million in 2008, $122.8 million in 2009
and $218.7 million in 2010.

Garuda's operational revenue is estimated to reach Rp 10
trillion ($1.1 billion) in 2004, up from Rp 8.3 trillion in 2003.
The airline's passengers were also projected to rise to about
eight million from seven million in 2003.

The airline has several times complained to the government and
lawmakers that it had been left behind by its competitors in the
region due to its inability to expand or rejuvenate its fleet
because of a lack of funds and the limit on new borrowing set by
its creditors. Creditors will only allow the firm to borrow a
total of US$25 million over 10 years.

Garuda has said that one of the options to boost the airline's
competitiveness and to avoid financial difficulties such as it
experienced in 1998 was to refinance the airline's debts.

The Office of the State Minister of State Enterprises is still
seeking the best life-saving options for Garuda. The options
include debt refinancing, a merger with troubled state-owned
airline Merpati Nusantara Airlines and debt-into-equity
conversion.

In order to improve its performance next year, Garuda plans to
lease at least 12 new airplanes, comprising Boeing 737 New
Generation, Boeing Classic and Airbus A330, for new regional and
domestic routes.