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Investor Daily - Restrukturisasi beri sinyal positif Garuda Indonesia menuju rebound
5 April 2024
By Ichsan Amin
Jakarta, ID – PT Garuda Indonesia Tbk (GIAA) is poised for even greater heights in 2024, building upon its impressive performance in 2023. This success is attributed to the company's strong performance and the favourable business environment following the Covid-19 pandemic.
Therefore, the aviation state-owned enterprise (SOE) aims to optimise its revenue potential in the commercial sector, encompassing cargo services as well as scheduled and unscheduled flights. Additionally, the company plans to enhance ancillary revenue streams, fine-tune corporate performance through load management strategies, and optimise risk management practices to fulfil long-term business commitments.
Last year, the company logged a revenue growth of 40% to US$2.94 billion from US$2.2 billion. This is an indicator that Garuda’s performance recovery is on track.
After navigating through a challenging phase during the pandemic and implementing various recovery measures, Garuda has achieved a current-year profit of US$251 million.
This further strengthens Garuda’s fundamentals after restructuring at the end of 2022.
Regarding its balance sheet, Garuda's short-term liabilities decreased by 30% from US$1.6 billion in 2022 to US$1.1 billion. This notable reduction is a significant indicator of the company's solid performance recovery, particularly in terms of its financial stability concerning debt values for the current year.
Garuda’s operational performance is also solid. Throughout 2023, Garuda Indonesia Group logged a passenger growth of up to 34% to 19.9 million from 14.8 million in 2022. In detail, Garuda carried 8,291,094 passengers and Citilink carried 11,678,930.
Meanwhile, the anticipated recovery in Garuda's financial and operational performance is expected to positively impact its shares under the ticker code GIAA. Several analysts see Garuda’s shares in a positive light as it will receive a strong catalyst from its financial recovery and the high mobility of passengers after the pandemic.
Garuda President Director Irfan Setiaputra said that Garuda’s domestic and international flights were expected to gradually recover this year towards normal levels in 2019 before the Covid-19 pandemic.
“Domestic flights have started to recover at the end of 2023, while we forecast international flights to recover this year,” Irfan said at a press conference in Jakarta on Monday (2/4/2024).
According to Irfan, the implementation of the corporation’s strategic activities aimed at accelerating performance recovery after the restructuring are coupled with a rise in passenger traffic. This growth is anticipated to strengthen Garuda Indonesia's foundation, enabling it to concentrate on sustainably optimising business revenue and profit.
He added that Garuda Indonesia logged other net incomes worth US$344 million, contributed from the implementation of reversal impairment asset worth US$198 million. The implementation of the activity has been conducted carefully and prudently by involving the Public Auditor Office (KJPP).
In addition to implementing the reversal of impairment assets, the company also recorded a profit from bond withdrawals amounting to US$63.8 million in December 2023, facilitated by the redemption of new bonds issued in 2022. The variance between the recorded value and the total amount paid is recognised as a gain on bond repurchase.
“The bond repurchase process is part of fulfilling restructuring obligations, involving Garuda's major debt securities and sukuk holders, who are creditors participating in the suspension of debt payments (PKPU),” he explained.
Garuda Indonesia initiated its debt restructuring at the end of 2021 with the expectation that it could facilitate the company's recovery. This plan was approved by creditors under a homologation agreement in 2022. As a result, Garuda's debt decreased significantly by 50%, from US$10.1 billion to US$4.6 billion.
Irfan explained that, thus far, the company has met its obligation to repay debt resulting from the PKPU through several schemes. The first scheme involves gradual repayment using operational cash flow. The second scheme entails converting debt into new equities, new debt securities, local debt claims, and new sukuk. The third scheme involves converting long-term debt for bank creditors, SOEs, and subsidiaries. The fourth scheme is to repay new debt securities and sukuk through tender offers.
“We aim for the gradual repayment of debt to align with the agreed-upon terms and enable Garuda Indonesia to realise its focus as a healthy business entity through optimized performance acceleration measures,” he stated.
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