JAKARTA (The Jakarta Post/ANN): Flag carrier Garuda Indonesia is facing an insolvency lawsuit over its failure to pay aircraft lease while trying to stay afloat in an industry severely hit by the Covid-19 pandemic.
Publicly listed AerCap Ireland Ltd., an aircraft leasing firm based in Dublin, filed on June 4 an insolvency lawsuit against Garuda with the Supreme Court of New South Wales in Australia.
During the ongoing trial, Garuda was “in the process of negotiating with AerCap to reach a commercial deal and restructure the contract outside the Court”, the 72-year-old airline company stated in its financial report released on Friday (July 16).
In 2020, the report also said Garuda saw its net loss swell to US$2.44 billion from $38.93 million a year earlier, while revenue fell 67.36 per cent year-on-year to $1.49 billion.
The insolvency lawsuit came around two weeks before the Indonesia Stock Exchange (IDX) suspended trading of Garuda shares after the airline failed to make timely coupon payments worth $14.8 million on its global sukuk.
The airline operated less than one-third of its fleet in May, with the rest grounded due to the outstanding lease issue.
Garuda’s dire financial state is reflected in its debt of more than $4.5 billion and monthly losses reaching $100 million, according to estimates of the State-Owned Enterprises (SOEs) Ministry.
Earlier in the year, on Feb 16, Helice Leasing SAS and Atterissage SAS filed a lawsuit against Garuda with the London Court of International Arbitration (LCIA) in a bid to seize collateral for the carrier’s funds stored in its account in Amsterdam, the Netherlands.
Most recently at home, cargo airline PT My Indo Airlines filed a postponement of debt petition (PKPU) against Garuda on July 9. The trial is set to begin on July 27.
“There are no impacts on [our] operational activities as of now,” Garuda said on Friday. The number of domestic air passengers in May was 2.44 million, less than half the 2019 figure, according to Statistics Indonesia (BPS), while it recorded around 40,000 international air passengers, far below the normal level of 1.44 million passengers in 2019. - The Jakarta Post/Asia News Network