Garuda wins debt payment rescheduling

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)