Please Update your browser

Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.

Jakarta Post

Garuda, ‘severely affected’ by COVID-19, may restructure bonds: Minister

  • Riska Rahman

    The Jakarta Post

Jakarta   /   Fri, March 20, 2020   /   03:50 pm
Garuda, ‘severely affected’ by COVID-19, may restructure bonds: Minister State-Owned Enterprises (SOE) Minister Erick Thohir. (JP/Seto Wardhana)

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.

Read also: ‘It affects our revenue’: Garuda Indonesia suspends more flights as coronavirus spreads


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.

Read also: Rupiah at weakest since 1998 crisis as foreign investors pull out amid virus fears

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)