(Bloomberg) -- Indonesian flag carrier PT Garuda Indonesia won approval from investors to extend the maturity of a $500 million 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 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 ($610 million) 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 in emailed statement.
Shares Rose
Shares of Garuda climbed 3.7% on Thursday, after rising as much as 5.1%, putting an end to a two-day drop.
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 PT Ciptadana Sekuritas Asia.
“The carrier will definitely need more financial support to ride through this pandemic,” Teja said. “The outlook of the overall airline industry will likely remain challenging for this year, and it is unlikely we can see a significant pick up in passenger traffic.
The virus has infected more than 35,000 people in the world's fourth-most populous nation and killed 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 reopen after months of mobility restrictions.
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