Garuda Indonesia is optimistic that it will not breach key debt covenants as its financial situation is looking stronger this year.

The carrier says that after it restated its 2018 financial results, its capital level for the year fell to $730 million, forcing it to seek a waiver from Export Development Canada for breaching the $800 million minimum required under a debt covenant.

Garuda CRJ1000

Garuda Indonesia is unlikely to breach debt covenants on loans related to its purchase of CRJ 1000s

Garuda Indonesia


The loan aided its acquisition of Bombardier CRJ 1000s and caps the carrier’s debt-to-equity ratio at 2.5x.

During the first quarter of 2019, however, its capital level rose to $791 million. It has not yet disclosed its accounts for the second quarter.

Finance director Fuad Rizal was also quoted in a 27 July CNN Indonesia article as saying that other creditors have agreed to the debt covenant proposals the airline had made, without providing any other details.

Under its restated 2018 results, Garuda reported a full year operating loss of $139 million, instead of the $101 million operating profit disclosed in April.

The change was largely due to the reclassification of future revenues from an inflight entertainment and communications deal, which it had included as operating revenue. The deal with Mahata Aero Teknologi has since been terminated.

The revised operating loss compares to an operating loss of $76.2 million for the previous financial year, which runs to 31 December. Attributable net profit narrowed year-on-year from $217 million to $179 million.

Despite the higher loss in 2018, Garuda indicated that it expects stronger revenue performance over the third and fourth quarters, which will help it achieve its guidance of a $70 million net profit for the full year.

For the first quarter it posted an operating profit of $49.5 million, and a net profit of $19.7 million.

It adds that strides have been made on its costs, including through the extension of leases on around 10 to 15 aircraft for up to four years, resulting in a reduction of up to 30% in rental rates. It is hoping to achieve similar gains from ongoing negotiations with ICBC Leasing.

Cirium’s Fleets Analyzer shows that the lessor has 20 Airbus and Boeing jets leased to Garuda and its low-cost subsidiary Citilink.

Source: Cirium Dashboard