Garuda wins approval for debt extension, easing cash crunch

Indonesian flag carrier PT Garuda Indonesia won approval from investors to extend the maturity of a $500 million sukuk, easing a cash crunch as the airline battles falling passenger demand during the coronavirus pandemic.

The state-owned airline, whose passenger traffic fell 91% in April from a year earlier, said in a statement Wednesday that investors holding 90.88% of the aggregate principal amount outstanding on its $500 million sukuk voted in favor of a three-year extension.

Garuda is also seeking to raise a bridge loan of as much as $500 million to meet working-capital requirements for three to six months. The government, which owns 61% of the carrier, has unveiled a plan to provide 8.5 trillion rupiah ($608 million) for the company, which has grounded 70% of its fleet.

The virus has infected more than 34,000 people in the world’s fourth-most populous nation and killed almost 2,000. The outbreak resulted in a 87% year-on-year drop in foreign tourist arrivals to the country in April.

The government is allowing airlines to carry more passengers starting this week, as Southeast Asia’s largest economy lets more cities to reopen after months of mobility restrictions.