Jakarta, Indonesia—Garuda Indonesia has entered a court-supervised restructuring process as the debt-ridden airline tries to rescue itself from bankruptcy.
The new attempt to save the Indonesian flag-carrier began after a Jakarta court granted a debt petition filed against the airline by one of its creditors Thursday.
The ruling gave Garuda and its creditors 45 days to submit a debt restructuring proposal. The period can be extended by up to 270 days.
Garuda said the court’s suspension of debt payment obligations would give it a solid framework to complete negotiations for the debt-restructuring process.
The “decision gives us 45 days to submit a composition plan that includes the restructuring of Garuda’s business obligations to creditors,” Garuda president and chief executive officer Irfan Setiaputra said in a statement.
He added that the airline would ensure all flight operations continue as normal during the restructure.
Garuda, 60 percent owned by the state, has suffered massive losses during the COVID-19 pandemic.
It posted a net loss of $2.4 billion last year, and another net loss of nearly $1.7 billion from January to September this year.
The airline said in June it had grounded two-thirds of its fleet of 142 jets, due to travel restrictions and declining demand.
In October last year, it announced it would lay off 700 employees, about 10 percent of its workforce, while many others have been on unpaid leave.