• Tom Jordan

Garuda Indonesia discusses Airbus delivery deferrals

Garuda Indonesia, Indonesia's flag carrier, is currently in talks with European aircraft manufacturer Airbus to defer deliveries of four aircraft which were due to be delivered later this year. The airline has cited the cause for this delivery delay is the ongoing coronavirus crisis which has had a detrimental affect on travel demand for both business and leisure markets.

Garuda Indonesia A330 approaches Melbourne, Australia. Photo by Duy Khang Tran | AeroNewsX

After Indonesia's month long ban on travel, imposed on 24th April 2020, was lifted on the 1st June, Garuda Indonesia has been quick to announce their intentions to open up new long-haul markets in the future from its leisure hub in Denpasar (Bali). These announcements included flights to the US West Coast and Europe. However, this has not altered the hard facts that the airline industry in Indonesia and around the world is struggling hard and needs to save cash as possible.

In order to achieve this cost cutting goal, many airlines around the world have been busy negotiating with aircraft manufacturers to defer deliveries of aircraft that were on order prior to the COVID-19 pandemic, aircraft for which there is presently no demand, particularly in the long-haul market.

One of these airlines is Garuda Indonesia which is currently negotiating with Airbus to defer deliveries for four aircraft the airline and its low cost subsidiary Citilink were due to take later this year. Garuda currently has nine Airbus A330-900neo's on order from Airbus, whereas its low cost subsidiary, Citilink, has twenty-five Airbus A320neo's on order. However, it has not been stipulated as of yet exactly which aircraft deliveries Garuda is looking to defer.

Like many other airlines which were heavily reliant on leisure markets, Garuda Indonesia has been financially crippled by the pandemic recording a 90% drop in passenger numbers since the pandemic began. By seeking to defer aircraft deliveries, the airline has been able to save money which could become critical for keeping the business afloat if the virus continues to cripple air travel in the long-term. Evidence of the airlines financial struggle came in June when the airline requested an extension to its $500 million bond loan, and sought new loans from the Indonesian government in order to ensure it stays afloat.

Garuda Indonesia CEO Irfan Setiaputra also stated that, in light of news aircraft lessors had grounded some of the airlines fleet over unpaid leasing bills, that the airline was restructuring the way it leases its fleet, and was currently in negotiation with lessors for implementation of these plans. Setiaputra also added the airline was looking to terminate "unsuitable contracts" with lessors of aircraft for which leasing prices could not be lowered or payment periods could not be extended.

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