Indonesia devises rescue package for national flag carrier

Jakarta (VNA) - Indonesia is finalising a financial bailout plan worth 1 billion USD for the national flag carrier PT Garuda Indonesia to help it avoid bankruptcy after the COVID-19 pandemic forced the airline to ground most of its planes.

Deputy State-Owned Enterprises Minister of Indonesia Kartika Wirjoatmodjo said the rescue plan includes a proposal to restructure the carrier's 500 million USD of sukuk ("sharia compliant" bonds) due next month and arrange new bridge loans of as much as 500 million USD to meet working capital requirements for three to six months. 

Garuda will table the sukuk proposal to investors on May 18 that will include an option to extend the maturity of the securities by three years or a staggered repayment, Wirjoatmodjo said. 

Last month, the carrier asked bondholders to begin talks with its financial adviser, citing an "extremely challenging environment for airlines" following the outbreak.

The government help in tiding over the financial crunch should sooth investor concerns about Garuda's ability to survive the pandemic that has forced airlines worldwide to seek state bailouts and emergency funding. 

Garuda, in which Indonesia's government owns almost 61 percent, has already cut employee salaries and renegotiated aircraft lease agreements to tackle a slump in travel sparked by the pandemic.

Deputy Minister Wirjoatmodjo said Garuda remains a good company with bright prospects, adding that its business will remain robust after the outbreak ends.

Garuda's Chief Executive Officer Irfan Setiaputra said in a March interview the airline won't default on the debt and was in talks with several banks about refinancing.

The airlines has received three loan facilities from state-owned Bank Rakyat Indonesia (BRI) with a total value of 382 million USD to fund its working capital./.