Garuda Indonesia Triumphs in Legal Battle Against Greylag, Explores Merger with InJourney

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Garuda Indonesia has emerged victorious in a legal dispute with two special purpose vehicles (SPVs) associated with the Avenue Capital Group, namely Greylag Goose Leasing 1410 Designated Activity Company and Greylag Goose Leasing 1446. The Paris Court of Appeals dismissed the appeal lodged by these entities, further ordering them to cover the legal costs incurred by the airline. This ruling, announced on February 22, marks another setback for the Greylag entities, which have consistently challenged Garuda Indonesia’s restructuring efforts across multiple jurisdictions.

The conflict originated from lease agreements for two aircraft, an A330-200 and an A330-300, between the SPVs and Garuda Indonesia Holiday France, with subsequent subleases to Garuda Indonesia. The SPVs had declared default events against Garuda, sparking a series of legal notices and eventual involvement in Garuda Indonesia’s PKPU proceedings—a process similar to Chapter 11 bankruptcy in the US, allowing for the restructuring of financially distressed entities.

In June 2022, a substantial majority of Garuda’s creditors approved a debt restructuring plan that aimed to return USD825 million to creditors. Despite the Greylag entities’ opposition, the Jakarta Commercial Court ratified this plan, leading to various legal challenges by the Greylag entities in an attempt to overturn the decision. However, their efforts have been unsuccessful, with the latest ruling by the Paris Court of Appeal marking yet another defeat, further ordering them to pay Garuda an additional EUR80,000 (approximately USD86,500) in costs.

Amid these legal battles, Garuda Indonesia has also been involved in discussions about a potential merger with state-owned tourism and aviation entity Aviasi Wisata Indonesia, also known as InJourney. This development follows speculation about the airline’s strategic direction and potential synergies with InJourney. Garuda Indonesia has confirmed that talks are ongoing and that both parties are exploring various options with the support of the Ministry of State-Owned Enterprises and other stakeholders. The merger aims to strengthen the national air transportation ecosystem and enhance the competitiveness of the Indonesian aviation industry.

InJourney, a holding company for Indonesia’s state tourism and aviation businesses, encompasses a range of entities, including airport managers Angkasa Pura I and II, hotel operator Hotel Indonesia Natour, retail and trade business Sarinah, and theme park and tourist attraction managers. The proposed merger with Garuda Indonesia is seen as a strategic move to consolidate and optimize state-owned assets in the tourism and aviation sectors, with the goal of completing the merger by October 2024.

This series of events underscores Garuda Indonesia’s resilience in navigating legal challenges and its proactive approach to strategic growth and restructuring. The airline’s legal victory and ongoing merger discussions reflect its commitment to strengthening its position in the global aviation market while exploring synergistic opportunities within Indonesia’s state-owned enterprise ecosystem.

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