Garuda Indonesia loses London case, may get $231m from state
Garuda Indonesia (GA, Jakarta Soekarno-Hatta) is negotiating to receive IDR3.3 trillion rupiah (USD232 million) in state funds in 2022 to acquire aircraft ahead of an expected rebound in air travel demand, the newspaper Kompas reported. Separately, however, it has lost a leasing debt lawsuit in London.
Edwin Hidayat Abdullah, an official at airport operator Angkasa Pura II who is overseeing the creation of a state-owned holding firm that may take control of Garuda, said on September 9 that the injection could be made via direct investment or through a partnership scheme, either to the flag carrier or to its regional subsidiary Citilink (QG, Surabaya).
State Equity Participation (Penyertaan Modal Negara – PMN) worth this amount has been earmarked as a reserve fund to invest in “the provision of a fleet” for Garuda Indonesia or Citilink in anticipation of a surge in demand when the recovery begins in mid-2022, he said.
To obtain the funds, Citilink would conduct a rights issue, he explained, and a newly created holding company, Aviasi Pariwisata Indonesia (Aviasi Wisata Indonesia – Aviata), would buy the aircraft.
“Recovery in the aviation sector could be dampened if there is no additional aircraft investment by next year,” Edwin warned as he detailed the measure during a hearing at the House of Representatives.
Meanwhile, Garuda Indonesia said on September 10 that it fully respected a ruling at the London Court of International Arbitration (LCIA) to issue an award in a lawsuit filed against it by Paris-based lessor Hélice Leasing S.A.S. The suit, one of many the carrier faces with lessors, dates back to early 2020 when Garuda ceased making monthly payments for B737-800 PK-GMY (msn 38884), one of 53 aircraft of the type the airline currently operates, according to the ch-aviation fleets advanced module.
“We fully respect and wisely view what the LCIA has decided in its authority as an international arbitration dispute settlement institution,” chief executive Irfan Setiaputra said in a written statement, adding that Garuda was coordinating with its team of lawyers to consider the next steps it would take.
Hélice is a special purpose vehicle that leases the Goshawk-owned aircraft in question to Garuda. The Boeing narrowbody has been stored at Jakarta Soekarno-Hatta since March 16 last year, according to Flightradar24 ADS-B data.