Close
Bali Discovery Tours: Homepage
Bali Hotels, Bali Villas and Bali News from balidiscovery.com
Home Bali Contact Bali Practicalities Bali News Bali Services Bali Transportation Bali Sports Bali Excursions Bali Villas Bali Hotels
Home · News · Garuda's Gloomy Start to 2006
Bali Hotels, Bali Villas and Bali News from balidiscovery.com
Bali Hotels
Bali Villas
Special Deals!
Packages
MICE Handling
Bali Excursions
Culinary - Dining
Guided Tour
Bali Spas
Bali Sports
Diving
Golf
Bali Transportation
Car Rental - Selft Drive
Private Jet Charter
Bali News
Bali Services
Bali Practicalities
Bali Contact
Bali Career
Home
 
Bali Update
Subscribe to our free weekly newsletter!
 
PATA header
PATA Gold Award 2007
Bali Update
PATA Gold Award Winner 2007
 
Bali Contact
Bali Discovery Tours
Komplek Pertokoan
Sanur Raya No. 27
Jl. By Pass Ngurah Rai,
Sanur, Bali, Indonesia

Tel:
++62 361 286 283

Fax:
++62 361 286 284

U.S.A. Fax:(toll free)
1-800-506-8633

U.K. Fax:
++44-20-7000-1235

Australian Fax:
++61-2-94750419

24h:
++62 812 3819724

Bali Discovery

SITE PATA ASITA
Bali News

Garuda's Gloomy Start to 2006

Financial Default, Privatization and Foreign Ownership – All Looming on the Horizon for the National Carrier in 2006.


Bali News: Garuda's Gloomy Start to 2006
Click Image to Enlarge

(1/2/2006)

Once ranking as the largest air carrier in the Southern hemisphere, the fortunes of national air carrier Garuda Indonesia have been in a state of steady decline in recent years. Closing offices and routes to Europe and the United States, Garuda's international reach and fleet have shrunk while the airline's executives have watched its domination of Indonesia's domestic route network evaporate in the face of a whole league of low-cost domestic air competitors.

On the Verge of Financial Default?

Just when it appeared things could not be worse for the Airline, Reuters' New Service broke the story that Garuda will begin 2006 by defaulting on a US$55 million debt payment that fell due at the end of 2005.

As reported on balidiscovery.com in [ Garuda Delays Debt Repayments to Creditors], the US$55 million repayment is due to the European Credit Agencies (ECA) and forms part of an overall debt of US$150 million and Euro 800 million owed by the Airline to the ECA.

The Airline has been struggling in the face of declining revenues to restructure its debt and rationalize its operations. In an official statement from Garuda on December 29, 2005, Garuda said it "has made significant progress in developing the basis for presenting a restructuring plan" but "additional work is required to reconcile complex inter-creditor and governmental issues."

The decision to default on the debt repayment has been formally reported to the Government who have reportedly endorsed the decision to forgo principal repayments while continuing to pay interest on its loans.

Emirsyah Satar, the President Director of Garuda has blamed rising fuel costs, intense competition, security concerns, a declining Indonesian Rupiah and the October 1, 2005 bombing in Bali as all having an aggregate deleterious effect on his company's financial status.

Garuda – For Sale?

Projected to post a loss for 2005 of US$70 million following a loss of US$81 million in 2004, Garuda's financial options appear to be few with the Minister for State Enterprises, Sugiharto, signaling that plans to take the state-owned airline public in 2009 may now have to be accelerated in order to save the carrier.

No Longer the National Flag Carrier?

Comments by Indonesia's Vice-President Jusuf Kalla suggest that Garuda may be losing its privileged position as the official national airline of Indonesia.

Kalla told the press that Garuda must be viewed as a business and its potential sale – even to foreign interests – can no longer be considered as somehow selling the nation to outsiders. Suggesting that such thinking is outdated, the Vice-President explained how many carriers - including KLM, Malaysia Airlines, New Zealand Airlines, and Qantas – have large shares of foreign ownership and control.

Separately, a spokesman for the Ministry of State Owned Enterprises suggested that there were already three major foreign airlines who have expressed an interest in buying into Garuda. The Government is reportedly in negotiations with the three to determine which among the them is best suited to help Garuda return to profitability while regaining its international reputation and route network.

A Dissenting Voice

Meanwhile, a group, calling itself the People in Support of Indonesia's Commercial Aviation (PAUKI), is opposing plans to sell the Airline to foreign interests, labeling such a move as "selling the Country." An advisor to PAUKI and the former President Director of Garuda, Mohammad Soeparno, has criticized past moves that allowed foreign investors to buy shares in existing domestic carriers as contributing to Garuda's current financial woes. Soeparno called on the Government to give a fresh cash injection to Garuda allowing the Company to return to health and be ready to compete in the increasingly liberalized world of commercial aviation.

Soeparno told the Indonesian-language Bisnis Indonesia that with proper attention from the Government and regulations to protect the State-owned carrier Garuda could return to its "glory days of 1984-1992."


© Bali Discovery Tours. Articles may be quoted and reproduced if attributed to http://www.balidiscovery.com.


 
 
Bali News by Bali Update
Subscribe to the Bali Update
Receive the latest news from Bali by email!



Our [Privacy Statement] explains how we handle the data you are providing.

 
Bali News by Bali Update
Explore the Archive of the Bali Update
Find related articles in our news archive!




or try to use Google Search :

Home · Bali Hotels · Bali Villas · Bali Excursions · Bali Sports · Bali News · Site Map · RSS

Bali News: More News
Heinz's 100 Varieties of Indonesian Cuisine
Bookshelf: A New Approach to Indonesian Cooking by Heinz von Holzen
(10/20/2014)
We Get More Mail!
Folly has its Price. Spirited Comments of Disaffection Continue to Flow in About Bali’s Newly Renovated Airport
(10/20/2014)
Who Owns Bali’s Heritage
Legality of Badung Regency Funding of Taman Ayun Questioned by Badung Legislator
(10/19/2014)
The Gods Must be Irritated
French Climber Evacuated From Upper Slopes of Mount Agung
(10/20/2014)
Sauvetage en Mer
Bali Lifesavers Show Their Skills at International Surf Rescue Games in France
(10/19/2014)
Chefs Al Fresco in Sanur Bali
Bali Culinary Professionals to Meet at Swiss-Belresort Watu Jimbar on Saturday, October 25, 2014
(10/19/2014)
World Travel Agents to Meet in Bali
United Federation of Travel Agents to Meet in Bali November 16-19, 2014
(10/19/2014)
Travel May be Ebola’s Biggest Victim
Editorial: In the Unfolding Ebola Epidemic Crisis the Most Deadly Symptom May be Fear
(10/20/2014)
Human Charity – On the House
‘Together as One’ Fun Run Raises More than US$9.000 to Improve Housing for the Poor in Bali
(10/19/2014)
Passing Gas
Denpasar, Bali Mayor Joins Chorus Urging Port of Benoa Not be Used for LNG Depot
(10/19/2014)
Ignoring the Protests
Tirta Wahana Bali International to Go Ahead with Benoa Bay Reclamation Project
(10/19/2014)
Ease of Access
Indonesia Fails to Enforce Rules on Handicapped Access
(10/18/2014)
All [News]!