Indonesia's airline industry in dire need of stimulus package

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JAKARTA (The Jakarta Post/ANN): The country’s airlines are in dire need of financial stimulus to withstand the Covid-19-induced crisis, amid a sharp revenue decline and looming deadlines for short-term liabilities, the Indonesian National Air Carrier Association (INACA) has said.

The comments came as flag carrier Garuda Indonesia was in discussion to receive a state capital injection of Rp8.5 trillion as a derivative of the latest issuance of Government Regulation No. 23/2020 on the national economic recovery programme.

Garuda grappled with US$3.25 billion in short-term liabilities, including $498.9 million in sukuk due to be paid on June 3 this year, according to its 2019 financial report. While airlines have taken measures such as renegotiating costs with lessors and third parties, cutting operational costs, as well as furloughing employees, financial relief is still deemed essential for recovery, according to the INACA.

The International Air Transport Association previously identified Indonesia as one of the priority countries at risk as the industry worsens during the pandemic. Garuda president director Irfan Setiaputra confirmed that the decision was still being discussed and was not yet finalized. The Covid-19 pandemic is “significantly affecting the company’s finances”, according to the company’s April 21 statement.

 

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