Garuda propose debt rescheduling

Garuda propose debt rescheduling

Agence France-Presse, Jakarta

Flag carrier Garuda Indonesia will ask for a rescheduling of US$800 million of its debt to European and Singaporean creditors later this week, the company's president said on Tuesday.

Garuda president Emirsyah Satar toldAFP the proposal would be made in two meetings with its promissory note holders in Singapore and its European Credit Agency (ECA) creditors in London later this week.

Satar declined to say whether he would seek a five-year rescheduling -- a plan Garuda mentioned would be offered to creditors in September -- but said that the airline would "present our financial standing and conditions" to them.

"We are yet to have a firm scheme but we will present them our position and we'll hear what programs they can offer us," he told AFP.

Of the $800 million, about $150 million were promissory notes held in Singapore while the rest was the firm's debts to the ECA, Satar said.

In 2001, Garuda signed a $1.5 billion debt-restructuring deal with the ECA and other creditors such as Indonesia's Bank Mandiri, to extend the repayment period to 16 years from 12.

Garuda's annual principal and interest payments amount to some $110 million.

Satar said Garuda would still suffer financial losses for 2005 but it would be less than last year's loss of Rp 811 billion ($80.6 million).

"We had planned to cut our losses for this year to at least half from last year's but due to the impact of the (Oct. 1) Bali bombing and other factors, we think it's no longer feasible for us to meet the target," he said.

The number of foreign tourists flying into Indonesia's resort island of Bali, the country's top destination, fell for the period Oct. 1-16 to just 45,000, down dramatically on September's 163,221, the highest for the year.

Garuda Indonesia has had difficulties in meeting its obligations due to increased competition and rising operational costs due to higher fuel prices.