Garuda Secures Approval to Extend Bond Payment

Jakarta. Garuda Indonesia has secured the approval of its bondholders to extend the settlement of $500 million worth of Islamic bonds due on June 3, eliminating one of the major doubts on the flag carrier's ability to survive the Covid-19 pandemic. 

Irfan Setiaputra, Garuda's president director, said close to 91 percent of the bondholders had approved Garuda's proposal to extend the bond maturity by three years with a covenant holiday period. 

"We are certainly optimistic that this could be a significant initial step in efforts to restore the performance of Garuda Indonesia, which has been affected by the Covid-19 pandemic," Irfan said. 

A government travel ban in the past two months has ground the local airline industry to a virtual halt. 

"Our revenue fell by almost 90 percent. About 70 percent of our planes are grounded now. Meanwhile, our average load factor is only 50 percent," Irfan said, describing the company's condition during the lockdown. 

The Transportation Ministry had already eased travel restrictions on Tuesday, allowing airlines to fly at up to 70 percent capacity. 

Earlier, the ministry has also eased travel requirements for passengers. 

Garuda was among five SOEs that received a government bailout as part of the national economic recovery (PEN). 

Under its most recent proposal, Garuda is set to receive a loan of Rp 8.5 trillion from the government, State-Owned Enterprises Minister Erick Thohir said.   

"Under the current board of directors, Garuda has performed well. But that performance has been subdued by the Covid-19 pandemic," Erick said. 

Garuda's shares rose 1.5 percent to trade at 278 per share at Indonesia Stock Exchange at lunch break on Thursday as some concerns over its future lifted with the bond payment deal.