Garuda wins approval for debt extension, easing cash crunch

Indonesian flag carrier Garuda Indonesia won approval from investors to extend the maturity of a $500m sukuk, easing a cash squeeze 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 Wednesday that investors holding 90.88% of the aggregate principal amount outstanding on its $500m sukuk voted in favour of a three-year extension. Garuda is also seeking to raise a bridge loan of as much as $500m to meet working-capital requirements for three to six months. The government, which owns 61% of the carrier, has unveiled a plan to provide 8.5t rupiah ($610m) for the company, which has grounded 70% of its fleet. “We are optimistic that this could be a significant initial step in the efforts to restore the performance of Garuda Indonesia which has been affected by the COVID-19 pandemic,” President Director Irfan Setiaputra said. While the maturity extension could provide the carrier with some cash flow relief, the company still needs a significant amount of funding to tackle the challenges presented by the pandemic, according to John Teja, a director at Ciptadana Sekuritas Asia.<br/>