Garuda Indonesia says in talks with banks, won’t default on debt

Workers clean the body of a Garuda Indonesia Airbus A320 aircraft inside Hangar 4 of PT Garuda Maintenance Facility (GMF) Aero Asia at Soekarno-Hatta airport in Jakarta, September 28, 2015.

PT Garuda Indonesia is in talks with several banks about refinancing and won’t default on its $500 million notes due June 3 despite challenges presented by the coronavirus, the airline’s Chief Executive Officer Irfan Setiaputra said.

Like airlines around the world, the Indonesian flag carrier has been deeply damaged by the virus and its impact on travel. Setiaputra said the outbreak has hit Garuda’s international market hard, with entry restrictions to Saudi Arabia a particular blow as the carrier typically flies more than half a million Indonesian pilgrims to Mecca and Medina every year. The airline has also cut Singapore flights to three a day from 10.

“For sure it is impossible for us to default in this note,” Setiaputra said in an interview with Bloomberg Television. “We are in discussions with several banks outside Indonesia as well as several state-owned banks in Indonesia. The progress of the discussion is quite positive and we are finalizing the term sheets with them, we do hope that we are going to do the refinancing rather than restructuring of this debt.”

The debt has tumbled to a record low of 49.67 cents on the dollar, according to Bloomberg-compiled prices.

Setiaputra has been head of Garuda for only two months, brought in after his predecessor was dismissed for allegedly smuggling a Harley-Davidson motorcycle on a flight to Jakarta. Setiaputra was previously a telecommunications executive with little experience in the aviation industry. He’s arrived at a challenging time.

In Friday’s interview, Setiaputra said “for sure” the state-owned carrier will cancel its remaining orders of 49 Boeing Co. 737 Max jets, which have been grounded for a year after two deadly crashes. He said the company will focus its fleet primarily on aircraft produced by Boeing and Airbus SE, and said that its 18 Bombardier Inc. CRJ1000 planes might have to be removed.

Garuda’s share price slid 5.9% on Friday, heading for a weekly loss of 29%. It has plunged 64% since Setiaputra was announced as chief executive on Jan. 22.

Bloomberg

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.