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Cleary Gottlieb Steen & Hamilton and Assegaf Hamzah & Partners are advising airline Garuda Indonesia on its strategy after the flag carrier said it could not distribute coupon payments for its $500 million sukuk following a 14-day grace period.

The Indonesian airline said its finances are still significantly impacted by the coronavirus pandemic. Garuda has also appointed Guggenheim Securities as a financial adviser to evaluate its strategy and improve its finances, as well as brokerage Mandiri Sekuritas.

Garuda chief executive Irfan Setiaputra said in the statement the decision to defer payments was "a difficult and unavoidable step" while the company focuses on improving its performance.

Garuda had already restructured the sukuk by extending the maturity by three years. The sukuk was originally due to mature last year.

Earlier this month Garuda returned two Boeing B737-800 jets to one of its lessors before their lease term ends to reduce cost.

Garuda is also seeking a suspension of debt payments to other creditors and lessors under a “standstill agreement,” a senior government official said. The government holds a more than 60 percent stake in Garuda.