DEPOK (eNBe Indonesia) - Shares of flag carrier Garuda Indonesia (GIAA) lost 9% to Rp202 on Tuesday (Jan 3), the day it resumed trading after being suspended since June 18, 2022. GIAA ever gained 9.8% to Rp224 at the opening trade, but then retreated from mid morning trade to market close. At Rp202, GIAA’s market capitalization was Rp18.48 trillion.
The Stock Exchange (IDX) management decided to suspend trading in GIAA shares in June 2022 as GIAA failed to pay coupon of global sukuk. GIAA, however, had on December 28 and 29, 2022 issued new sukuk, completing most of the debt restructuring.
Garuda’s fundamental is still the concern of investors as the flag carrier suffered loss in operation. It should be consistent in reducing operating expenses going forward.
For the second and third quarters of 2022, Garuda recorded a positive net profit, but due to other income from the restructuring. While the Covid-19 case might not a concern, with the end of the implementation of public mobility and activity implementation program (PPKM), so the demand for flight travel will increase, a positive catalyst for GIAA.
Data from the Central Bureau of Statistics (BPS) on Monday pointed to consistent increase in domestic air travel with 4.6 million pax in November against 4.57 million in October. As a result, the country recorded 47.27 million pax in the first 11 months of 2022, jumped by 81.3% from the corresponding period last year. Lifting of Covid-19 related restrictions and a busier year for political activities might lead further growth this year.
BPS data also pointed to a relatively strong visit from foreign tourists, whilst still way below pre-pandemic level. BPS recorded 544,827 visits by foreigners in November, down slightly from October, closer to 50% of visits before the pandemic.
State-owned Enterprises Minister Erick Thohir said government and Garuda have taken joint efforts in restructuring Garuda. “Alhamdulillah, Garuda Indonesia’s transformation is getting better and more visible. Starting from management, finance, to service, we will continue to improve its quality so that Garuda can fly higher,” he said.
Meanwhile, President Director of Garuda Irfan Setiaputra said that his party would add production equipment. This year, Garuda targets to be able to operate at least 66 fleets. Limited fleets, of course, will not allow Garuda to tap the full recovery of tourism and domestic travel.
Garuda will also continue to maximize its strategic hub-based network development strategy, by strengthening flight connectivity to flight destinations with high passenger demand from a number of strategic aviation hubs in Indonesia including Jakarta, Denpasar, Makassar to Kualanamu (Medan).
“We are also optimizing these efforts by maximizing the operation of large-bodied aircraft on flight routes with positive performance,” he said.
Noting that Garuda has completed the restructuring process, carried out through several stages. It also reported a change in share ownership.
Completion of the restructuring process was carried out through the issuance of new bonds and bonds on 28 and 29 December 2022. This was the final series of GIAA’s strategic corporate actions, to achieve an effective date based on the peace agreement which was homologated by the Commercial Court at the Central Jakarta District Court on 27 June 2022.
Irfan said GIAA has did a number of strategic stages in completing the restructuring process. These stages include obtaining a homologation decision on the peace agreement by the Central Jakarta District Court, including maximizing steps to renegotiate aircraft rental expenses, restructuring long-term debt, and other business liability instruments.
Apart from, Garuda has also received State Capital Investment (PMN) funds worth Rp7.5 trillion as support for steps to improve Garuda’s performance as the national flag carrier.
The PMN is related to the right issue step by providing 39.78 billion new shares at value of Rp7.79 trillion. The fund includes the realization of PMN and the participation of other shareholders.
This stage was then followed by private placement where Garuda issued shares of 25.8 billion units at value of Rp5.05 trillion for debt conversion, including the realization of mandatory convertible bonds (MCB).
With a series of new shares issuance , GIAA currently has a composition of share ownership consisting of government ownership of 64.54%, Trans Airways 7.99%, public shares 4.83%, and creditor 22.63%.
In addition, Garudsa has also issued new sukuk as part of the follow-up to Garuda’s restructuring of Global Sukuk worth US$500 million which was restructured into new sukuk with a principal value of US$78.01 million with a maturity tenor of nine years.
Garuda has also issued new debt instruments as part of the restructuring scheme for creditors classified as lessors, finance lease creditors, aircraft manufacturers, MRO vendors, and foreign trade debt creditors.
The parties are entitled to receive new notes according to the settlement plan with an initial principal amount of US$624.21 million. The new bonds were issued with a maturity tenor of nine years.***