Shareholders of PT Garuda Indonesia (Persero) Tbk, the holding company of Garuda Indonesia (GA, Jakarta Soekarno-Hatta), have approved plans to raise up to IDR14.3 trillion rupiah (USD929.48 million) via a rights issue later this year. Shareholders holding 99.93% of the company's stock voted in favour of the proposal at an October 14 shareholder's meeting in Jakarta.

The company will issue a maximum of 68,072,851,378 shares priced between IDR182 (USD0.012) and IDR210 (USD0.013) per share. The Indonesian government, which holds a 60.54% stake in the airline, has committed to acquiring IDR7.5 trillion (USD480 million) of the freshly minted stock which will see the company's authorized capital increase from IDR13.7 trillion (USD881.4 million) to IDR66.3 trillion (USD4.3 billion). The Indonesian government had promised their capital contribution back in April pending shareholders approving the rights issue.

"The company will optimise the additional capital mainly for maintenance, aircraft restoration, fuel, and plane leases. The proceeds hopefully can strengthen the company's business outlook," Garuda CEO Irfan Setiaputra told Reuters after the meeting.

During the meeting, shareholders also gave the green light to convert IDR4.2 trillion (USD268.8 million) worth of debt into equity. The company is achieving this by issuing a further 22,970,514,286 shares that do not come with pre-emptive rights.

Shareholder approval marks another step in Garuda Indonesia's restructuring which saw the airline's debts halve from just over USD10 billion to around USD5.1 billion. The carrier has also cut its widebody aircraft leasing costs by 65% and narrowbody leasing costs by 35%. Aid by the debt restructuring and a post-pandemic surge in passenger traffic, Garuda Indonesia posted a surprise USD3.76 billion net profit for the first half of 2022.

If the rights issue is fully subscribed towards the maximum quoted price, the Indonesian government's stake in the company will shrink to 51.25%. The second largest shareholder, PT Trans Airways, will see its stake slide from 28.27% to 21.9%. Recently, Indonesian transport minister Budi Karya Sumad said he was keen to see Garuda's Middle East-based codeshare partners participate in the rights offer given the strong demand for Hajj flights between Indonesia and Saudi Arabia.