Indonesia may soon be without a flag carrier, as Garuda Indonesia's woes continue to deepen amid the pandemic and with bankruptcy a very real possibility for the airline.
On Friday, the airline announced that it will be offering its employees early severance packages in July with the company's financials in dire straits. The measure was as good an indication as any that Garuda is struggling to survive, with the company saying that it's exploring several options to keep the company afloat, including debt restructuring, a government bailout, and liquidation.
Garuda independent commissioner Yenny Wahid addressed concerns surrounding Garuda on Twitter recently, reassuring that those in charge of the airline are doing all they can to ensure its survival.
"Many are asking about Garuda. Right now we are working hard so Garuda avoids bankruptcy. Garuda inherited many huge problems, from corruption cases to inefficient budgeting. But Garuda is our flag carrier. It must be saved. I ask for your support and prayers," Yenny tweeted.
The daughter of former President Abdurrahman Wahid added that while Garuda booked an operational profit of US$19 million in 2019, the airline is still struggling under the weight of its mountain of debt. Things took a turn for the worst during the pandemic, with the airline unable to cover the operational costs of flights as passenger numbers are limited due to social distancing requirements.
Garuda currently has a debt of IDR70 trillion (US$4.9 billion). CEO Irfan Setiawan said the airline's debt is growing by IDR1 trillion (US$70 million) per month.
Other than reducing costs by early termination of employees, Garuda is also expected to reduce its operational fleet by 50 percent to around 70 planes.