Garuda wins debt payment rescheduling

JAKARTA (JP): President Abdurrahman Wahid said on Monday national flag carrier Garuda Indonesia had reached an agreement with its foreign creditors to reschedule its US$1.8 billion in debt.

Speaking at a breaking-of-the-fast gathering at the office of the Centre for Strategic and International Studies (CSIS), the President said the agreement allowed the maturity of the national flag carrier's debt to be extended to up to 16 years.

"Hopefully, this debt agreement will ease Garuda's financial difficulties," the President said in a speech. However, he did not disclose the details of the agreement.

The airline has embarked on a major overhaul of its operations after nearly being grounded last year. Like other Indonesian airlines, the carrier was hard hit by the financial crisis that struck Asia in 1997.

Garuda sought the aid of airline Lufthansa AG and Deutsche Bank, both of Germany, in the middle of last year to help it resolve its debt problems.

Garuda said recently it was seeking to restructure $380 million in short-term promissory notes, $600 million in leasing agreements for six Airbus-330s and another $100 million in long- term debt.

Garuda president Abdulgani said earlier this month sweeping cuts in the airline's operating costs would enable it to book a net profit of $34 million (about Rp 238 billion) this year, its first profit in 10 years

At the gathering with CSIS executives, President Abdurrahman voiced his opposition to a proposal to invite Singapore Airlines (SIA) to manage Garuda, saying the government should not allow a foreign airline to dominate the national flag carrier.

Coordinating Minister for the Economy, Finance and Industry Kwik Kian Gie said earlier this month the government was considering inviting SIA to help manage the ailing Garuda.

The proposal met strong opposition from Garuda executives, who said the airline did not need SIA's help. (hen/prb)