Garuda Indonesia restructured US$9.8B of debt and flew back to profit

Garuda Indonesia, the flag carrier, was crushed by COVID-19: with border closures killing its international and domestic demand, it could not service roughly US$9.8 billion of debt including aircraft leases, loans, and a global sukuk of US$500 million. By mid-2021 it was close to collapse and faced litigation from multiple lessors trying to repossess aircraft.

Indonesia chose restructuring over liquidation. Garuda negotiated a wide-ranging plan covering lessors, banks, bondholders and trade creditors: aircraft lease rates were renegotiated and deferred, a chunk of debt was converted to equity and to new instruments, and the airline's capital structure was reset to a viable level. The plan was approved by creditors and the court in 2021-2022, one of the largest corporate restructurings in Indonesian history.

On 28-29 December 2022 the new instruments were issued: US$624 million of new debt notes and US$78 million of new sukuk, both with nine-year tenors, replacing the old obligations including the US$500 million global sukuk. Mandiri Sekuritas, the lead advisor, described the deal as the largest restructuring in Indonesian corporate history.

With the balance sheet reset and travel rebounding, Garuda returned to operating at scale: by the 2022-2023 period it reported sharply improved results, and analysts tracked its recovery as the template for how an airline restructuring can preserve the national carrier's brand, slots and network.

Restructuring completed in late 2022 with new bonds worth US$624M plus US$78M sukuk; profit turned positive by 2022-23

Fresh long-dated notes replacing unpayable short-term debt bought the airline runway to recovery

Sukuk restructuring respected Islamic-finance investors, keeping the Gulf and domestic investor base engaged

Lessor deals preserved the fleet, avoiding the empty-airport death spiral of liquidation

The nine-year maturity matched the expected multi-year aviation recovery, so payments became affordable

A state-linked airline can settle with global lessors and bondholders in a market-led plan rather than liquidation, if the numbers are honest

Garuda Indonesia survived and its shares and financials recovered alongside Southeast Asian travel, with the company posting its largest profits in years in 2023. The restructuring is now the reference case in Indonesia for distressed airline and national-carrier balance-sheet repair.