Garuda Indonesia faces major headwinds after restructuring

Garuda Indonesia CEO Irfan Setiaputra was optimistic after winning overwhelming approval from creditors for a plan to restructure billions of dollars in debt. And while the state-owned airline may have averted bankruptcy, it still faces huge challenges. Setiaputra set the bar high after Garuda got far more than the two-thirds support it needed, saying the result shows the "high trust" investors have in the company and vowing a fast return to profitability. Analysts, however, say that a bloated workforce, high fuel prices and increasing competition as the pandemic wanes will continue to plague Setiaputra and other executives. "The approval can also be seen as a 'statement of bankability' of Garuda's business plan, which will give [a] boost to Garuda's immediate financing needs as it is still very much struggling to keep its operations afloat," Gerry Soejatman, an aviation analyst and head of think tank Indonesian Aviation Network, told Nikkei Asia. But Soejatman added that streamlining into a stable business will not be easy. "Going from a big elephant into a lean and mean machine still needs a reduction in human resources and a change in how it does business," Soejatman said, adding that reducing "head count into the right number of employees per aircraft" is a key task. Garuda received more than 90% support from creditors with voting rights who participated in the vote. The plan includes issuing $825m in new bonds as well as raising $330m by offering equity to non-shareholding creditors under a court-led process that began in December. The court put the debt figure at 142.41t rupiah ($9.6b). Some creditors will have to take a discount on what they are owed.<br/>