June 5, 2020 / 7:31 AM / a month ago

Garuda Indonesia secures over 90% approval for sukuk extension: CEO

FILE PHOTO: A technician rides a car as he passes Garuda Indonesia's Boeing 737 Max 8 airplane parked at the Garuda Maintenance Facility AeroAsia, at Soekarno-Hatta International airport near Jakarta, Indonesia, March 13, 2019.REUTERS/Willy Kurniawan/File Photo

JAKARTA (Reuters) - PT Garuda Indonesia (GIAA.JK) has secured majority approval to extend the maturity of $500 million sukuk, or Islamic bonds, by three years, Chief Executive Irfan Setiaputra told a virtual news briefing on Friday.

The airline sought to extend the maturity of the debt, originally due on June 3, after its operations took a hit from coronavirus-linked travel restrictions.

Sukuk holders representing more than 90% of the bond value had agreed to the extension as of Friday, he said, but the company is still waiting until June 10 for all holders to vote.

Garuda offered a fee of up to 1.25% to sukuk holders who voted in favour of its proposal before June 1.

“We have put forward a proposal that makes sense in this current situation. Hopefully in three years, conditions will improve and we can execute our obligations,” Setiaputra said.

Travel restrictions have resulted in a 90% drop in passengers volume at Garuda, which posted profit of $6.5 million last year, and forced the company to slash costs and focus its business in cargo and chartered flights, Setiapurtra said.

A presentation document Garuda posted on its website said the company sees potential for a 10% increase in cargo revenue this year.

According to the document, last year Garuda group carried 335,764 tonnes of cargo with a yield of 43.8 cents per tonne per mile.

Reporting by Bernadette Christina Munthe; Writing by Fransiska Nangoy; Editing by Shri Navaratnam and Jan Harvey

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