(Bloomberg) — Troubled flag carrier PT Garuda Indonesia put off the payment on its Islamic debt once again, highlighting its financing crunch as the firm tries to avoid bankruptcy.

The Southeast Asian airline, struggling as the pandemic depresses air travel worldwide, said it “will continue to defer the periodic distribution amount due June 3,” in a filing to the Singapore stock exchange on Thursday.

The state-owned company missed the distribution payment on a $500 million sukuk on June 3, and a 14-day grace period ended on Thursday. The Sharia-compliant note due in June 2023 has tumbled around 46 cents on the dollar so far this month to a record low of about 30 cents, prices compiled by Bloomberg show.

The Indonesian government said early this month that it’s considering a debt standstill for the carrier to allow it to restructure. New variants of the coronavirus are adding uncertainty to the outlook for airlines around the world, as tentative plans to open up travel destinations are delayed or shelved. Dozens have collapsed or been forced to restructure and adjust their fleets to ride out the crisis.

Among them in Asia, Thai Airways International Pcl said this week it’s seeking new loans to help fund operations after the court approved its plan to rehabilitate at least 170 billion baht ($5.4 billion) of debt.

‘Covid Zero’ Policies Make Asia a No-Go Zone for Air Travel

Garuda also added Guggenheim Securities to its list of financial advisers, which already include Mandiri Sekuritas, Cleary Gottlieb Steen & Hamilton, as well as Assegaf Hamzah & Partners.

Garuda’s Finance Director Prasetio had said on Tuesday that the firm is thoroughly reviewing the adequacy of its cash flow for operational needs, when asked by Bloomberg about whether it would be able to meet the sukuk payment deadline.

The company has offered early retirement for its staff and is renegotiating contracts with lessors. President Director Irfan Setiaputra said last month that the carrier needs to completely restructure its business, potentially reducing the number of planes to less than half its main fleet.

Story continues

The airline is in the process of appraising several units to be divested as part of its total restructuring plan, Setiaputra said on Metro TV late Tuesday.

(Updates throughout.)

More stories like this are available on bloomberg.com

Subscribe now to stay ahead with the most trusted business news source.

©2021 Bloomberg L.P.

(305) 707 0888