Garuda reschedules jet lease payments

JAKARTA (JP): National carrier Garuda Indonesia Airlines denied yesterday the airline company had defaulted on its lease payments for six Airbus aircraft.

Garuda spokesperson Arief Hartanto said the airline did not default on the "operating lease" payments but rescheduled them, due to the country's currency turmoil and lower revenue last year.

Arief said the state airline had renegotiated with three financing companies on its December payment worth US$8 million for the six airbus A330-300s.

"The financing companies understood the situation of the Indonesian economy and agreed to postpone the payments until the situation improves," Arief said.

He did not say when the airline would be able to make payments.

The three financing companies are French companies Credit Lyonnais and Parisbas and German company Deutsche Morgan Grenfell.

Garuda has been making lease payments for a year, worth $630 million, Arief said.

Airbus is a European consortium made up of French state-owned Aerospatiale, British Aerospace Plc, Daimler-Benz Aerospace, a unit of Daimler-Benz AG, and Construcciones Aeronauticas SA of Spain.

Minister of Transportation Haryanto Dhanutirto denied yesterday knowing about the airline's debt.

"I haven't heard about it, why don't you ask them (Garuda)?" he told reporters.

Arief said the airline's lower revenue last year was due to the currency crisis, which had seen the value of the rupiah drop about 70 percent since last July, and to natural disasters hitting the country.

The currency crisis caused a slowdown in tourism last year, as many Asian countries were also hit by the crisis. Tourists from Asia make up 40 percent of all foreign visitors.

Last year's drop in tourism was also caused by the severe choking smog in several parts of the country, which also spread to neighboring countries, caused by forest fires.

Arief said the crash of a Garuda airplane last September also contributed to the airline's poor performance last year.

A Garuda Indonesia Airbus 300-B4 crashed shortly before landing in Medan, North Sumatra, killing all 234 people on board, in September.

Arief said Garuda would economize its operations as part of improving its performance this year.

"Our airplanes are relatively young, so the maintenance costs are rather low," he said.

Garuda has reportedly been trying to sell millions of dollars of assets to pay off debts. (aly/das)