Garuda Indonesia talking to Airbus to delay 2020 deliveries

Flag carrier Garuda Indonesia (GIAA.JK) is in talks with Airbus (AIR.PA) to delay deliveries of four aircraft this year, its chief executive said on Tuesday, as the coronavirus outbreak restricts travel and dampens demand, reported Reuters.

“This year we should receive four Airbus planes, but we are negotiating to delay that,” CEO Irfan Setiaputra said in a parliamentary hearing.

Garuda has nine A330neos on order with Airbus that has yet to be delivered, according to the Airbus order book, while its low-cost arm Citilink has 25 A320neos on order.

An Airbus spokesman declined to comment on the company’s commercial discussion.

Garuda faces financial difficulties after the coronavirus outbreak caused major disruption to global travel, resulting in a 90% drop in passenger volume at Garuda, the airline said last month.

The company was forced to seek maturity extension to its $500 million Islamic bonds that were due in June and seek new government loans.

Garuda, meanwhile, is also restructuring its aircraft leasing by seeking a lower leasing price or extending the period, Setiaputra said, adding that it also seeks to terminate “unsuitable” contracts.

Twelve of its lessors have agreed to a restructuring, according to Garuda presentation material in parliament, while six have declined to give rent deferral. It is still in negotiations with 13 other lessons.

“Today there are a number of lessors who grounded our planes because of our incapability to make payments,” Setiaputra said.