Indonesia prepares $1 billion lifeline to save Garuda
The Indonesian authorities drafted a 1$ billion rescue plan for the national airline, Garuda, to prevent it from collapsing due to the coronavirus crisis
The plan was announced by a government official on May 11, 2020. It includes a bridge loan of up to $500 million, and a restructuring proposal of $500 million sukuk (Islamic bonds), Deputy State-Owned Enterprises Minister Kartika Wirjoatmodjo told Bloomberg. “Garuda remains a good company with bright prospects,” said the minister, adding “its business will remain robust after the outbreak ends.”
Despite reducing the salaries of its employees to alleviate the impact of the coronavirus crisis, Garuda was at risk of not paying a series of bonds maturing in June 2020.
The Indonesian state holds nearly 61% of the capital of Garuda. Along with its subsidiary Citilink, Garuda Indonesia operates a fleet of more than 200 aircraft.
On May 9, 2020, a Jakarta court sentenced Emirsyah Satar, former CEO of the Garuda group, to eight years in prison for a corruption case linked to the purchase of parts from Airbus and Rolls Royce. He was found guilty of receiving bribes in exchange for the acquisition of Airbus A320 and A320 aircraft and Trent 700 engines by the airline. In 2017, Rolls Royce settled probes over large-scale bribery across three continents with an $809 million payment.
In December 2019, the CEO of the airline was sacked after using the delivery of a brand new Airbus A330-900 to smuggle luxury items, including a Harley Davidson motorcycle.
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