INDONESIA’S state flag carrier Garuda Indonesia said on Thursday (Jan 4) that it has paid back US$113.8 million of the debt it owes to bondholders as part of its restructuring process.

In 2022, the airline won creditors’ approval to restructure more than US$9 billion of debt after it faced financial difficulties due to among others Covid-19 related travel curbs.

Garuda said that it settled US$113.8 million worth of debt to bondholders after completing two tender offers. Using tender offers meant the airline only had to pay around US$50 million to settle the US$113.8 million.

“We hope that this initiative could improve our capital structure, so it can become healthier,” said Irfan Setiaputra, Garuda Indonesia’s president director, adding the debt was paid using the company’s internal cash.

A company generally does a debt tender offer to retire its bonds at less than the original face value and by doing so it also reduces the interest costs.

The settlement was related to Garuda’s US dollar bonds, some of which are in the form of Islamic notes, with a total principal amount at US$624.21 million, Garuda said.

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The bonds were issued for Garuda’s creditors as part of the restructuring agreement.

Following the partial settlement, the remaining principals for the bonds is at US$501 million, the airline added. REUTERS