Indonesia is drawing up a $1.0 billion rescue plan for struggling national airline Garuda after the coronavirus forced the company to ground most of its planes, Bloomberg News reported Monday.
Under the plan, some $500 million in Garuda debt would be restructured with another $500 million in new loans to help the airline meet operational needs for the next six months, the report said, citing Deputy State-Owned Enterprises Minister Kartika Wirjoatmodjo.
The company was facing the prospect of defaulting on Islamic bonds known as sukuk, due next month, the report said, adding that investors would be offered the option of extending maturities on their investment by three years or a staggered repayment scheme.
“Garuda remains a good company with bright prospects,” Wirjoatmodjo was quoted as saying.
“Its business will remain robust after the outbreak ends.”
Neither the ministry nor the airline responded to AFP’s request for comment on the report.
State-controlled Garuda — which operates a fleet of more than 200 aircraft with its Citilink subsidiary — has temporarily cut employee salaries to help cope with an air travel slump sparked by the global pandemic.
Coronavirus has dealt a crushing blow to the global aviation industry, which has been directly affected by confinement measures and travel restrictions.
Colombia’s Avianca, the second-largest airline in Latin America, filed for bankruptcy protection Sunday in a bid to reorganise its debt due to the unprecedented hit to global air travel. – AFP