Just a week after the restructuring plan for Thai Airways was approved two more Southeast Asia airlines are experiencing significant financial issues.
Picture Garuda Indonesia plane on runway credit SydneyAirportSpotterOld1 on flickr
Indonesia national airline Garuda Indonesia was struggling to make profits even before the pandemic and the financial issues have increased over the last year. Yesterday the airline announced it would not be able to make repayments on a US$500 million debt.
“Under these circumstances, and in order to ensure the company emerges from the pandemic as a strong and healthy airline, the company announced today that it has reluctantly concluded that it must continue to defer the payment.”Garuda Indonesia Statement
Garuda had already extended the total debt by three years until 2023.
The company is also looking at a suspension of debt repayments to other creditors and lessors under a “standstill agreement”.
The Indonesia government holds a stake of more than 60% in the airline and the state-owned enterprise ministry recently came up with four options for its future, one of which was to close the airline.
It is believed that the airline is looking to reduce the size of its fleet by up to 50% and has already returned two Boeing B737-800 jets to its lessors to reduce cost.
Trading in shares in the airline were suspended today.
The parent company of Philippine Airlines has reported a record US$1.51 billion loss in 2020 and has announced a debt restructuring plan in a bid to survive. shares were suspended from trading today amid concerns that the accounts were not in compliance.
“Philippine Airlines will have a long way to go for recovery. The uncertainty of the situation still prevails, but news on the availability of COVID-19 vaccine brings hope that passenger traffic will be better than 2020.”Philippine Airlines Statement
Revenue fell by 64% compared to 2019 as the airline saw passenger traffic significantly reduced due to the pandemic.
The company announced last October that it was cutting a third of its workforce to cut costs. It is now looking at fleet restructuring as part of expected reduced future demand and also rationalisation of its route network including reducing flight frequencies and stopping some “ultra-long-haul” routes.
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