Garuda restructuring faces delays sparked in part by pandemic

[JAKARTA] Struggling airline Garuda Indonesia is facing a delay to its restructuring after creditors cited Covid-19 flare ups in seeking an extension to debt proceedings in the South-east Asian country.

Creditors of the flag carrier, which has seen business suffer due to the pandemic, have requested extensions ranging from 45 to 60 days, according to Jandri Siadari, a legally-appointed administrator.

Garuda has also applied for an extension, and the court will decide on Friday (Jan 21) whether the postponement can be granted.

The creditors come from a range of countries. Brigitta Rahayoe, who represents a claimant in India, said that given lockdowns there "we are having difficulties obtaining duly legalised power of attorney."

State airport operator Angkasa Pura I wants the deadline prolonged by 45 days.

While countries around the world have responded to the Omicron coronavirus variant by tightening restrictions, social distancing rules haven't been as strict as they were in early 2020, with even legal proceedings put on ice.

In Indonesia officials have asked the public to work from home, and avoid overseas travel over the next few weeks to avoid a spike in Omicron cases that could overwhelm its health system.

An extension would allow more time for the process to determine which claims against the airline can proceed.

So far only 148 of the 501 creditors who submitted claims have completed the pre-verification process, the administrator said.

The state-owned carrier is seeking to more than halve its liabilities and to renegotiate leasing terms or return planes to aircraft lessors with the smallest penalties possible.

It is also looking to extend the maturity of its dollar sukuk - Islamic debt securities - by 10 years.

Bloomberg reported earlier this month that creditors had submitted bills totalling 198 trillion rupiah (S$19 billion) to the administrators.

BLOOMBERG