Kartiko Wirjoatmodjo, deputy minister of state-owned enterprises said that the debt negotiations and restructuring were underway with all lenders, aircraft lessors, and global Sukuk (syariah bond) holders.

He said, “Should the restructuring fail, we have no other option but to close it and find a new (national flag carrier) as it is impossible for (the government) to inject capital with such debt value.”

Garuda Indonesia’s ill fate has been well documented over the years. Inadequate management and losses incurred over the years were dragging the carrier down and the Covid-19 pandemic pushed it towards bankruptcy.

Currently, the carrier faces its worst crisis since its formation in 1947. As per Garuda Indonesia’s financial report, the carrier earned around $56 million, while the aircraft rental was about $56 million, aircraft maintenance cost around $20 million; fuel cost around $20 million; and salaries $20 million. It has accumulated a debt of around $4.9 billion.

While some members of the government do believe that the carrier can be saved. Indonesian House of Representatives member Herman Khaeron said that if the situation returns to normal following the pandemic, then Garuda will be able to improve its performance and cover its liabilities.

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In November, ultra-low airline startup Avatar Airlines has made an offer to buy state-owned Thai Airways’ Boeing 747 fleet, which is in the process of retiring. Avatar Airlines also made a similar offer to British Airways to buy its Boeing fleet.

The startup wants to fly the Boeing 747 aircraft domestically. Avatar’s founder and chief executive officer Barry Michaels told the media, “We’ve developed a creative and considerable investment opportunity for Thai Airways to convert some of its unused and off-lease wide-body aircraft and potentially realise a far greater return than if the aircraft were simply liquidated for cash.”

Thai Airways, was previously was state-owned. However, to seek bankruptcy protection, the government had to sell down its majority stake to qualify for bankruptcy protection under Thai law.

During the first half of 2020, Thai Airways reported losses of around $900 million. The carrier further revealed that its losses for the second quarter of 2020 stood at around $170 million. The losses incurred were due to the coronavirus pandemic which forced the carrier to halt all operations during the period.

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Tassapon Bijleveld, executive chairman at Asia Aviation, Thai Air Asia’s largest shareholder, told the media, “Before the Covid-19 resurgence, we had 40 planes serving domestic flights. But since the re-emerging of the outbreak, some provincial lockdowns have made it impossible for people to travel and passenger demand has dropped significantly at every airport.”

Malaysia-based carrier AirAsia X has proposed a restructuring of its debt in order to survive the Covid-19 crisis, media reports said. The carrier has proposed a restructuring of $15.3 billion of its debt and reducing its share capital by 90 percent.

The proposed restructuring by AirAsia X will result in the carrier making structural changes to get out of the current crisis, including resizing its fleet and letting go of some of its employees.

AirAsia also scaled back its investment in its Indian subsidiary as financial difficulties continue to trouble the carrier.  AirAsia has reduced its stake in the subsidiary to 13 percent. Tata Sons, which already owned a 75 percent stake in the carrier will increase its stake to 87 percent in the carrier.

AirAsia wants to diversify its business, and according to its chief executive officer Karen Chan, around 50 percent of its revenue will come from non-aviation sources.

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Karen Chan told the media, “We anticipate in five years time, basically by the end of 2024, that 50 percent of revenue would be coming from non-flight related non-aviation-related revenue.”

“Not all the flights are always full, and the load factor will not be 100 percent. So the unsold infantry, and because they are so perishable, even as an 85 percent load factor for an Airbus A320, I still have about 20 to 25 seats unsold. I will now be able to bundle that unsold inventory for one ringgit or 25 cents with the hotel’s direct inventory. And I will be able to go into the market with a best buys guarantee. We can go and expand into where other airlines are just not able to do so. We actually want to go and be seen as basically a lifestyle partner.”

Founder Tony Fernandes revealed last year that the airline is working on a new super app that will compete with the likes of Southeast Asian giants such as Grab and Gojek. The aviation industry has been hit hard by the coronavirus pandemic and through the super app, AirAsia is looking for a new way to generate income. The super app which AirAsia is working on will be an all-in-one app for food delivery, shopping, payments, entertainment and travel.

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It is reported that the change in ownership is unlikely to affect the AirAsia India brand but could see the airline separate from AirAsia’s operations.

In October,  AirAsia X proposed restructuring its debt in order to survive the Covid-19 crisis. The carrier has proposed a restructuring of $15.3 billion of its debt and reducing its share capital by 90 percent. The proposed restructuring by AirAsia X will result in the carrier making structural changes to get out of the current crisis, including resizing its fleet and letting go of some of its employees.

AirAsia X said that it is facing liquidity constraints and with no return to normalcy insight, imminent default of contractual commitments will precipitate a potential liquidation.

In September, it was reported that AirAsia is planning to raise around $602 million by the end of the year in order to survive the Covid-19 crisis. The carrier was also reviewing its business in Japan, Reuters reported. According to an AirAsia spokesperson, the carrier would borrow its money from banks as well as from investors. AirAsia was also in talks with local and foreign investors including private equity firms, strategic partners and conglomerates, she confirmed.

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The startup wants to fly the Boeing 747 aircraft domestically. Avatar’s founder and Chief Executive Officer Barry Michaels told the media, “We’ve developed a creative and considerable investment opportunity for Thai Airways to convert some of its unused and off-lease wide-body aircraft and potentially realise a far greater return than if the aircraft were simply liquidated for cash.”

“Our offer to Thai Airlines is part of a bigger partnership opportunity that we believe will not only accelerate Avatar’s plans to start flying within 12-18 months, but also position Thai Airways for a codeshare entry into the U.S. market and a long-term relationship between our two companies.”

The carrier also wants to acquire British Airways’ 26 Boeing 747-400s which retired recently. It is reported that in exchange, British Airways will own a 22 percent stake in Avatar Airlines.

Avatar Airlines, which is based in Florida, aims to dominate the US aviation industry in ultra-low passenger fares flights by offering 30 percent to 50 percent lower fares than competitors’ regular fares, with no baggage or change fees. Even though the carrier currently owns no aircraft, it will offer annual memberships where one can pay a one-time fee and receive unlimited bookable flights within 72 hours.  This will cover the cost of taxes and fees.

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Recently, South Korean aviation giants Korean Air and Asiana announced a similar plan to merge their businesses in order to sustain their operations. Both ANA and Japan Airlines are in need of government aid to weather the Covid-19 storm, and hence a merger would make sense for the carriers.

Both ANA and Japan Airlines are major international carriers and are among the biggest carriers in Asia, carrying nearly 100 million passengers between them. The carriers are also rivals with similar fleets and competing on similar routes. A potential merger between ANA and Japan Airlines would create one of the biggest airlines in Asia.

However, no decision has been taken as of yet and the idea has only been floated unofficially. No prominent decision from the Japanese government can be expected within a short period of time.

Last month, Japan Airlines forecasted a record operating loss of as much as ¥380 billion yen for the year through March because of the coronavirus pandemic. The carrier also announced that it would retire 24 of its Boeing 777 aircraft to sustain its business amid the difficult times. During the same period, ANA also said that it would retire more than a tenth of its Boeing fleet and delay two aircraft orders for similar reasons.

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The proposed restructuring by AirAsia X will result in the carrier making structural changes to get out of the current crisis, including resizing its fleet and letting go of some of its employees.

AirAsia X said that it is facing liquidity constraints and with no return to normalcy in sight, imminent default of contractual commitments will precipitate a potential liquidation.

It is reported that AirAsia X has appointed board member Dato’ Lim Kian Onn, who is also a chartered accountant and former investment banker, to lead the airline restructuring.

MIDF Research said in a client note, “AAX’s creditors could potentially come to an agreement on the terms but they would have to be content with recovering a minute fraction of their capital.”

Last month, media reports said that AirAsia is planning to raise around $602 million by the end of the year in order to survive the Covid-19 crisis. The carrier is also reviewing its business in Japan, Reuters reported.

According to an AirAsia spokesperson, the carrier might borrow its money from the bank as well as from investors. The carrier is in talks with local and foreign investors including private equity firms, strategic partners and conglomerates, she confirmed.

AirAsia Group posted net losses of around RM803.85 million during the first three months of this year due to the ongoing coronavirus pandemic.

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The job cuts will be made in Singapore Airlines as well as its subsidies SilkAir and Scoot.

Chief Executive Officer Goh Choon Phong told the media, “Having to let go of our valuable and dedicated people is the hardest and most agonizing decision that I have had to make in my 30 years with SIA. The next few weeks will be some of the toughest in the history of the SIA Group.”

“When the battle against Covid-19 began, none of us could have predicted its devastating impact on the entire aviation industry. Eight months on, the number of carriers that have collapsed continues to rise. It is still not clear who will ultimately survive this crisis,” Goh added.

The coronavirus has taken a heavy toll on the global aviation industries with carrier all over the globe are set to lose billions in revenue this year.

In the month of June, Singapore Airlines revealed that it secured an additional $1 billion in credit facilities to help the carrier deal with the coronavirus pandemic.

This is in addition to the $6.32 billion it raised for a rights issue.

It raised around S$900 million through loans on some of its aircraft. Besides that, it also arranged new lines of credit and a short-term loan of around S$500 million with several banks for further liquidity.

It also raised around $542 million as long-term loans by securing some of its Airbus and Boeing aircraft under its fleet. The carrier has raised the loans by securing its Airbus A350-900s and Boeing 878-10s.

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The carrier has raised the loans by securing its Airbus A350-900s and Boeing 878-10s.

So far, Singapore Airlines has raised $7.96 billion in liquidity since the start of the financial year 2020/2021.

According to Bloomberg Intelligence analysts James Teo and Chris Muckensturm, Singapore Airlines’ net loss could widen to S$1.2 billion for the quarter through June due to the coronavirus pandemic. They also said that revenue may slump by 87 percent because of a 96 percent drop in capacity.

It has already suffered losses of around S$732 million as a result of the outbreak.

Last month, Singapore Airlines revealed that it secured an additional $1 billion in credit facilities to help the carrier deal with the coronavirus pandemic.

This is in addition to the $6.32 billion it raised for a rights issue.

Singapore Airlines had raised around S$900 million through loans on some of its aircraft. Besides that, it also arranged new lines of credit and a short-term loan of around S$500 million with several banks for further liquidity.

The carrier said in a statement, “During this period of high uncertainty, Singapore Airlines will continue to explore additional means to shore up liquidity as necessary.”

Singapore Airlines cancelled most of its operations earlier this year to help curb the spread of the novel coronavirus.

A report by the International Air Transport Association (IATA) revealed that the global aviation sector would lose around $314 billion in revenue this year due to the coronavirus pandemic.

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