Garuda Indonesia at the Edge of the Horn

TEMPO.CO, Jakarta – The government is looking for a detour to extend PT .’s breath Garuda Indonesia (Persero) Tbk. The blue-tail airline business is on the brink of falling due to debt bondage due to lessors worth US$ 7 billion or equivalent to Rp 100.6 trillion.

The Minister of State-Owned Enterprises or BUMN said the airline would focus its aviation business on the domestic market. This strategy is one of the business plans to reduce flight operating costs while expanding the potential of the domestic market segment.

As for international routes, Garuda has explored cooperation with the Emirates airline so as not to lose its global passengers. “After all, we can’t just stay still, can we? The name of business and looking for solutions must still be considered. This includes formulating a new strategy and focus for Garuda’s domestic flight business,” said Erick Thohir in a written statement, Thursday, November 4, 2021.

Cooperation between Garuda and Emirates is marked by an agreement code sharing. Cooperation code sharing is an airline business action that allows two companies to share flight ticket sales for the same code.

This agreement was officially signed by the two companies at a meeting in Dubai, United Arab Emirates, Wednesday, November 3. While walking, Garuda also continues to explore renegotiation with 31 lessor-nya.

In August 2021, Garuda prepared a renegotiation proposal to be submitted to lessors and creditors. To support the proposal, the airline prepared several business plans. The proposal preparation and negotiation process involved five consultants at once. The consultants include McKinsey & Company, Gunggenheim Partners, Cleary Gottlieb, Assegaf Hamzah & Partners, and PT Mandiri Sekuritas.

President Director of Garuda Indonesia Irfan Setiaputra said the process restructurisation takes quite a while. “We want it fast. But it’s not always easy to carry out negotiations like this,” said Irfan in a short message to Tempo.

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