Jakarta has confirmed Garuda Indonesia (GA, Jakarta Soekarno-Hatta) free of bankruptcy, prompting the Indonesian government to immediately start the search for new investors, deputy minister for state-owned enterprises Kartika Wirjoatmodjo told reporters. The ministry has been in talks with several foreign airlines and financial investors, he added.

Such investors will have the resources to aid the flag carrier’s new business plan, the minister said after the airline managed to gain creditor support to restructure its IDR142 trillion rupiah (USD9.5 billion) worth of liabilities, the Indonesian news agency Antara reported Kartika as saying. Garuda has managed to halve this debt, through court-led negotiations and in out-of-court settlements, to USD5.1 billion, he said.

Garuda Indonesia has also cut aircraft leasing costs in negotiations that began more than two years ago. To accommodate new shareholders, the government said it was prepared to cut its shareholding to no less than 51%, inject a further IDR7.5 trillion (USD500 million) into Garuda’s capital this year, and conduct a rights offering in the fourth quarter to raise additional cash.

Among the investors being targeted are “hub players” in Singapore, Dubai, and Qatar, the minister claimed, namely Singapore Airlines, Emirates, and Qatar Airways.

“This has tremendous potential because there are hub players, like in Singapore, Dubai, Qatar, that don’t have a domestic market. We hope it will be a promising combination if there are hub players who can become investors,” he explained, adding that Indonesia by contrast has a domestic passenger market with “extraordinary” potential. “We have contacted several of these airlines,” he said.

Kartika revealed that during the restructuring Garuda had cut lease rates for narrowbodies by 35% and for widebodies by around 65%. Some lessors had also agreed to restructure lease payments until the end of 2023.

Challenges in managing costs and fuel prices remain, but Garuda Indonesia expects to change its operating income from negative to positive soon, strengthened also by accelerating the growth of its subsidiary Citilink (QG, Surabaya) as a low-cost carrier.

There has been some political opposition to the continued allocation of public funds to prop up the airline. On July 1, NasDem Party member Rudi Hartono Bangun said at a parliamentary session that IDR7.5 trillion was not a small amount, the House of Representatives website recounted. Questioning the clarity of the allocation, he stressed that after years of mismanagement Indonesian citizens would not accept further carelessness on the part of the airline’s executives.