The Jakarta Post
The State-Owned Enterprises (SOE) Ministry is in talks with national flag carrier Garuda Indonesia to restructure its sukuk due in June as the airline struggles to pay its dues with the COVID-19 pandemic hitting the travel industry hard.
SOE Minister Erick Thohir said Friday that Garuda had been “severely affected” by the pandemic with no income from travels for umrah (minor pilgrimage), as well as to and from Australia, which had closed its borders.
“We have been negotiating regarding the airline’s [condition] for more than a month,” Erick said in a teleconferenced press briefing on Friday.
Garuda Indonesia issued a US$496.8 million global sukuk on June 3, 2015, which is due to mature on June 3 with an annual return of 5.95 percent, according to the company’s financial report released in September last year.
In February, Garuda’s president director Irfan Setiaputra said the COVID-19 outbreak was projected to affect the company’s revenue significantly as the airline has been forced to cut flights to various countries.
“It is inevitable that the [COVID-19] coronavirus outbreak will affect our revenue significantly. However, we have yet to calculate the exact amount of losses,” he added.
In addition to the slumping revenue, Erick also said the weakening rupiah against the US dollar could also impact SOEs’ debts, including Garuda Indonesia.
The local currency on Friday stands at Rp16,037 against the dollar as of 2:18 p.m. Jakarta time, Bloomberg data shows. The last time it touched the level and reached Rp 16,650 was in June 1998 after widespread rioting that led to the downfall of president Soeharto.
To cushion the impact of COVID-19 on the economy, the government has announced three stimulus packages that aim to focus on healthcare spending, cash transfers and fiscal incentives for businesses battered by slow economic activity. The government has allocated Rp 120 trillion (US$7.5 billion) from this year’s state budget to cushion any potential economic shock to Indonesian enterprises and individuals. (mpr)