The government is proposing to absorb the mandatory convertible bond of state-owned airlines firm, PT Garuda Indonesia Tbk (IDX: GIAA) shares worth of Rp8.5 trillion (US$594.41 million) - Photo by Antara

JAKARTA (TheInsiderStories) – The government is proposing to absorb the mandatory convertible bond (MCB) of state-owned airlines firm, PT Garuda Indonesia Tbk (IDX: GIAA) shares worth of Rp8.5 trillion (US$594.41 million). This was revealed by the company’ CEO, Irfan Setiaputra, in a virtual hearing with the parliament today (07/14).

“Why MCB? because we want to ensure that management also makes every effort to maintain business continuity rather than merely relying on bailouts, “he said at the meeting.

As part of the National Economic Recovery program, the airliner has become one of the state-owned enterprises that will get a capital injection from the government. In the issuance of the MCB, the government through the state financial firm, PT Sarana Multi Infrastruktur (SMI) will be able to act as a standby buyer, he adds.

The proposed MCB will be issued with a three years tenure and aims to improve the company’ revenue and cost fundamentals. “This has been the number of times Garuda assisted by the government, so it is important to ensure a stronger cost structure and fundamental revenue,” he said.

Regarding the Garuda‘ financial condition, Setiaputra revealed, it had received the approval of SUKUK-holders to extend the settlement period of the bond issuances of $500 million with a three years tenure from the maturity date on June 3, 2020.

“In accordance with the results of the vote at the general meeting of SUKUK-holders today, the approval of the votes granted was 90.88 percent or $454.39 million of all the principal forests,” said the CEO in a statement on June 10.

He stressed, with the approval, the company believes will accelerate the recovery of its performance. In 2020 I, Garuda‘ operating income was valued at $ 768.12 million, down 43.15 percent compared to the previous year of $ 1.09 billion.

For information, last year, the flight company recorded a net profit of $6.99 million. The achievement of this 2019′ profit reversed the 2018 net loss of $231.16 million which was booked after restated the financial report.

The net profit was in line with Garuda‘ total revenue which rose 5.5 percent to $ 4.57 billion last year from the previous year of $ 4.33 billion. But in the first quarter of 2020, the company actually posted a net loss, reversing from the previous bookkeeping profit due to decrease in income.

US$1: Rp14,300

Written by Editorial Staff, Email: theinsiderstories@gmail.com