On Tuesday, the Indonesia Stock Exchange (IDX) lifted a trading suspension on Garuda’s shares that had been in place for one and a half years following the airline’s default on US$500 million worth of sukuk (sharia-compliant bonds) in 2021.

Garuda shares plummeted to Rp 175 (1.18 US cents) apiece on Thursday after suffering an almost 7 percent drop for two consecutive days, the steepest one-day drop allowed before the bourse freezes trading of a company for the day.

Analysts said the decline could linger for some time, as investors were expected to continue dumping shares of the airline.

“Many investors [feel] Garuda’s performance has yet to reach a positive zone,” said Nafan Aji Gusta of Mirae Asset Securities on Thursday.

Read also: Bumpy takeoff for aviation, tourism sectors this year

Nafan added that Garuda’s stock price was in a “markdown phase”, a sustained downward trend, and said it remained unclear when the phase would end.

Desmond Wira, a trader and author of books on finance, added that market sentiment was in the negative zone more generally, so many investors would avoid higher-risk companies such as Garuda.

He noted that while Garuda’s financial situation was better than it had been, this was mostly because it had manage to avert pressing liabilities. Investors still wanted to see whether the airline could perform over the long term.

“In my opinion, it’s best to wait and see first,” Desmond said on the question of whether to buy Garuda stock.

In December, Garuda took several steps to restructure its $500 million in liabilities to lessors and creditors by issuing a new round of sukuk amounting to $78 million with a 9-year tenure and by converting Rp 5.05 trillion in obligations into shares in the airline.

The airline also raised Rp 7.79 trillion in fresh funds through a rights issuance on Dec. 27, Rp 7.5 trillion of which came from a state capital injection, while the complement came from existing investors.

The government now owns 64.54 percent of Garuda, up from the previous 60 percent. Few minority shareholders opted to invest further at the issuance.

The Finance Ministry had previously predicted that if minority shareholders participated in the rights issuance, the government’s ownership of the national carrier would fall to 51 percent.

Haris Eko Faruddin, air transportation and tourism analyst at state-owned lender Bank Mandiri, said the government’s increased share of the company showed that many investors remained skeptical about Garuda.

“It was still too early to have most investors’ trust restored,” Haris said on Thursday.

Haris noted that tough macroeconomic prospects for 2023 could cause more Indonesians to seek out cheaper fares. Garuda’s full-service segment is priced above the country’s low-cost carriers.

Furthermore, a weak rupiah and high aviation prices would remain a challenge for airlines.

Read also: No more PPKM, but govt urges public vigilance, sticking to health protocols

However, analysts said the government’s recent decision to lift COVID-19 public activity restrictions (PPKM) nationwide would serve as a tailwind for airlines, including Garuda, as it would spur tourism and mobility, raising demand for passenger flights in the process.

Mirae Asset Securities’ Nafan said Garuda should focus more on busy routes, specifically popular domestic routes and tourist destinations. He added that the cargo segment would remain a lucrative alternative to boost revenue.

Garuda Indonesia CEO Irfan Setiaputra told The Jakarta Post on Thursday that the company would focus on its business plan and improve its performance.

Irfan said in previous statements that the airline saw 2023 as an opportunity to make its businesses more competitive and profitable. It also aimed to operate total of 72 airplanes, double the current number, to cater to increased demand.