Distressed flag carrier PT Garuda Indonesia plans to undertake a rights issue to raise additional capital and will invite strategic investors to take part as it attempts to revive its ailing business.

The airline expects to launch the equity issue after the Indonesian government makes good upon its plan to inject the carrier with fresh funds, Finance Director Prasetio said during a court hearing with creditors Monday. 

“Our first priority is to partner with local investors before we expand our search to include international ones,” Prasetio, who goes by one name, said.

Indonesia has previously said it is open to the possibility of private investors becoming majority owners of the troubled airline, which is currently in talks with creditors to restructure $9.8 billion of debt. Garuda is one of several airlines facing financial distress because of Covid-19.

Prasetio didn’t elaborate on how much money may be sought in a rights issue or what sort of stake any new investors would hold in the company. The carrier plans to first use money from a planned state capital injection of 7.5 trillion rupiah ($519 million) to rebuild operations. “We will also use the money to settle obligations toward the tax office and our employees,” he said.

The capital injection was approved by the Indonesian parliament last week and will take place once Garuda reaches a settlement with its creditors.

Garuda, meanwhile, is set to lay out its debt composition plan at a meeting May 10. As of Monday, the court-appointed administrators have verified claims from only 312 creditors, worth 47.5 trillion rupiah. Some 150.6 trillion rupiah of claims belonging to 172 creditors, mostly lessors, are still being examined.

Voting on the composition plan will then occur on May 17, said Asri, an administrator, who also only goes with one name.

A deputy at the country’s state-owned enterprises ministry said in November that Garuda was “technically bankrupt” and should reduce its liabilities by more than 60% via a restructuring process in order to survive the pandemic. Garuda plans to reduce its liabilities to $3.7 billion from $9.8 billion. 

As part of the restructuring, the airline is also seeking to cancel billions of dollars of aircraft orders from Airbus SE and Boeing Co.