Indonesia drafts $1.4b rescue package for Garuda

Indonesia is finalizing a US$1b financial bailout plan for its flag carrier to help it stave off a debt default after the coronavirus crisis forced the airline to ground most of its planes. The rescue plan includes a proposal to restructure PT Garuda Indonesia's US$500m sukuk due next month and arrange new bridge loans of as much as US$500m to meet working capital requirements for three to six months, Deputy State-Owned Enterprises Minister Kartika Wirjoatmodjo said. 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 virus outbreak.The government help in tiding over the financial crunch should sooth investor concerns about Garuda's ability to survive the pandemic that's forced airlines worldwide to seek state bailouts and emergency funding. Garuda, in which Indonesia's government owns almost 61%, has already cut employee salaries and renegotiated aircraft lease agreements to tackle a slump in travel sparked by the pandemic. "Garuda remains a good company with bright prospects," said Wirjoatmodjo, a former chief executive of state-owned PT Bank Mandiri. "Its business will remain robust after the outbreak ends."<br/>