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Garuda Indonesia Cost Efficiency

By administrator | October 29, 2020 | Infrastructure Transportation.
Garuda Indonesia Cost Efficiency
Illustration: Garuda Indonesia Cost Efficiency

As well as Garuda Indonesia Cost Efficiency. Garuda Indonesia Tbk. (GIAA) confirm that the restructuring steps are currently being carry out through efficiency in all lines. This was carry out in line with negotiations with a number of lessors in the midst of the Covid-19 pandemic.

President Director of Garuda Indonesia, Irfan Setiaputra. He explain that the government through the Ministry of State-Owned Enterprises has submit a major restructuring from the financial side to re-evaluating its flight routes. Currently, the Company has aircraft lease agreements with 31 lessors.

As for the overall value of the contract. Considering that currently the negotiation process is still ongoing with each lessor. In addition, in the negotiation process. Garuda try to pay attention to the confidentiality principle set out in the agreement. Thus the company in this case is oblige to maintain the confidentiality of the agreement.

Including regarding the lease value of the agreement. As a result of the impact of Covid-19, PSBB and new normal conditions. Until August 2020, the company experience a decrease in production capacity to adjust to current demand trends. The company note a decrease in transport traffic.

Cost Efficiency in Domestic and International

Garuda Indonesia Cost Efficiency
Illustration: Garuda Indonesia Cost Efficiency

Both for passengers and cargo transport by 72 percent and 50 percent, respectively, compare to last year. In addition, the Company also experience a decrease in domestic production by 55 percent and international production by 88 percent compare to last year. The state-owned airline is currently negotiating directly.

With the relevant lessors to reach an agreement out of court. The issuer coded as GIAA shares has record a loss of US $ 728 million and a significant decrease in its negative equity balance of US $ 80 million. The full-service airline will issue Mandatory Convertible Bonds (OWK) to improve its financial position.

The issuance of the OWK will be carried out in denominations of a maximum value of IDR 8.5 trillion. OWK with a term of 7 (seven) years from the date of issuance of the OWK which will be converted into series B New Shares at the end of the OWK period, the amount of which will be determined.

By dividing the OWK principal value owed on the OWK conversion date by the conversion price. GIAA has also confirmed the early completion of the contract period for 700 of its employees who are contract workers. This policy took effect on November 1, 2020 for at least 700 employees with the status of contract workers.

Cost Efficiency During the Pandemic

Who since May 2020 have undergone an unpaid leave policy. The decision, he said, was purely the result of lower levels of demand for flight services during the pandemic. Through this early contract settlement, Irfan also ensures that he will fulfill all the affected employees’ rights in accordance with applicable regulations.

Including prepayment of the company’s obligations for the remaining employee contract period. Previously, Deputy Minister of BUMN Kartiko Wirjoatmodjo hoped that in 2021-2022 the condition of the airline company could be much better than the conditions before the pandemic occurred.

So Covid-19 is a challenge and an opportunity, some are affected and must be repaired but it also opens up new opportunities for innovation and growth in the future, he explained.

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