Indonesia’s flagship carrier, Garuda has entered a court-supervised restructuring process in a last-ditch effort to stave off bankruptcy.
This latest attempt to save the airline began after a Jakarta court granted a debt petition filed against the airline by one of its creditors Thursday.
The ruling gives Garuda and its creditors 45 days to submit a debt restructuring proposal. The period can be extended by up to 270 days.
The airline said the court’s suspension of debt payment obligations would give it a solid framework to complete negotiations for the debt-restructuring process.
Garuda, which is 60 percent owned by the Indonesian Government, has been under financial pressure for a number of years, with allegations of mismanagement and corruption by senior executives.
It has posted net losses of more than US$4 billion since the start of the Covid pandemic.
The airline said in June it had grounded two-thirds of its fleet of 142 jets, due to travel restrictions and declining demand.
In October last year it announced it would lay off 700 employees, about 10 percent of its workforce, while many others have been on unpaid leave.