Indonesia: Airline industry in dire need of stimulus package to withstand crisis

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 Garuda Indonesia was in discussion to receive a state capital injection of Rp 8.5t as a derivative of the latest issuance of Government Regulation No. 23/2020 on the national economic recovery program. With the current situation, the INACA has called on the government to provide financial stimulus for the ailing airlines in the form of credit relaxation and soft loans. “Airlines need stimulus to get fresh working capital to resume operation after two months of halted operation, and also to help them pay their restructured debts,” INACA chairman Denon Prawiraatmadja said Tuesday. Garuda grappled with US$3.25b in short-term liabilities, including $498.9m in sukuk (Islamic bonds) due to be paid on June 3 this year, according to its 2019 financial report. However, with decimated passenger numbers and grounded fleets, other airlines are grappling with debts and obligations to fleet lessors. Currently, airlines are still burdened with costs such as parking fees for their grounded aircraft, maintenance costs, pilot license fees, and many other costs, Denon added.<br/>