tag

Indonesia’s sovereign wealth fund Danantara is reducing its financial support for flag carrier PT Garuda Indonesia, putting in doubt the distressed airline’s ability to refresh its fleet.Garuda will now receive 23.7tn rupiah ($1.4bn) from PT Danantara Asset Management, an arm of the wealth fund, through a private placement, which comprises a cash injection and a loan conversion, according to an exchange filing. The airline was supposed to obtain $1.8bn under a plan drawn up last month.In addition to covering finance expenses and providing working capital, Danantara Asset would have helped with fleet expansion. However, Danantara Asset notified Garuda that “there is also an adjustment to the planned use of funds, which no longer includes fleet expansion,” the airline said in a separate statement.The carrier has struggled financially since the Covid-19 pandemic and has grounded an increasing number of planes because of difficulties making maintenance payments. The number of idled jets operated by the company and subsidiary low-cost carrier PT Citilink Indonesia rose to 51 as of June, nearly 40% of the group’s total fleet, and up from 33 a year ago.Leasing new planes comes with high price tags amid a dearth of available aircraft and a global surge in travel. The carrier earlier this year paid twice as much to lease a Boeing Co 737 Max jet than it does for older 737 jets.Garuda should focus on getting some of its grounded planes flying again, said Gerry Soejatman, a Jakarta-based independent aviation analyst.“Ordering new planes for early delivery is going to be very expensive, and probably less prudent financially,” he said. “It is better to see the grounded jets being put back into service or returned to lessors before Garuda place big aircraft orders.”

Norway's $2tn wealth fund, the world's largest, has divested from US construction equipment group Caterpillar and from five Israeli banking groups on ethics grounds. The five banks are Hapoalim, Bank Leumi, Mizrahi Tefahot Bank, First International Bank of Israel and FIBI Holdings, the fund said in a statement. The six groups were excluded "due to an unacceptable risk that the companies contribute to serious violations of the rights of individuals in situations of war and conflict," said the fund, which is operated by Norway's central bank. The companies did not immediately reply to requests for comment. The Israeli embassy in Oslo declined to comment. Prior to its divestment, the fund held a 1.17% stake in Caterpillar valued at $2.1bn as of June 30, its records showed. The stakes in the five Israeli banks were valued at a combined $661mn, also as of June 30, according to fund data. The news was announced when the Tel Aviv and New York stock exchanges were closed. Shares in Caterpillar were down 0.4% in pre-market trading at $430.61 per share Tuesday. FIBI Holdings shares were up 4%, putting them on course for their best day since early 2024. Hapoalim's stock was up 3.3% and Bank Leumi, Mizrahi Tefahot Bank, and First International Bank of Israel were between 1.8% and 2.8% better off. The fund's ethics watchdog, called the Council on Ethics, said that "in the council's assessment, there is no doubt that Caterpillar's products are being used to commit extensive and systematic violations of international humanitarian law". Bulldozers manufactured by Caterpillar "were being used by Israeli authorities in the widespread unlawful destruction of Palestinian property," it said. The violations were taking place both in Gaza and the West Bank, the council said, adding that "the company has also not implemented any measures to prevent such use". "As deliveries of the relevant machinery to Israel are now set to resume, the council considers there to be an unacceptable risk that Caterpillar is contributing to serious violations of individuals’ rights in war or conflict situations." The council, a public body set up by the Ministry of Finance, checks that firms in the portfolio of the fund meet ethical guidelines set by Norway's parliament. The fund is invested in some 8,400 companies worldwide. It makes recommendations to the board of the central bank, which has the final say. The board agreed with the council's recommendation. The Norwegian fund said on August 18 that it would divest from six companies as part of an ongoing ethics review over the war in Gaza and developments in the West Bank, but declined at the time to name any groups until the stakes were sold. On the banks, the ethics watchdog initially scrutinised the Israeli banks' practice of underwriting Israeli settlers' housebuilding commitments in the region. On Monday, the council said that all the banks excluded had, "by providing financial services that are a necessary prerequisite for construction activity in Israeli settlements in the West Bank, including East Jerusalem ... contributed to the maintenance of Israeli settlements". Around 700,000 Israeli settlers live among 2.7mn Palestinians in the West Bank and East Jerusalem. Many settlements are adjacent to Palestinian areas and some Israeli firms serve both Israelis and Palestinians. The United Nations' top court last year found that Israeli settlements built on territory seized in 1967 were illegal, a ruling that Israel called "fundamentally wrong", citing historical and biblical ties to the land.