The revenue contraction was primarily attributed to severe funding constraints, which left nearly 40% of the airline’s fleet grounded for maintenance, thereby limiting flight operations. Simultaneously, operating expenses rose in key areas, with maintenance and repair costs jumping 23% while the company also recorded a foreign exchange loss. These financial pressures place the carrier in a fragile position, particularly as the global aviation industry braces for higher fuel bills linked to the conflict in Iran. Rising jet fuel prices are already forcing carriers to adjust fares and capacity, adding further headwinds to Garuda’s earnings outlook.
The financial results follow a period of significant corporate restructuring. In 2025, the company posted positive equity, ending a five-year capital deficit, aided by a US$1.4 billion capital injection from Indonesia’s sovereign wealth fund, Danantara. Despite this improvement, the widening losses have raised questions about the strength of its balance sheet and the pace of its turnaround. The airline, a critical link across Indonesia’s 17,000+ islands, is also expected to play a role in strengthening trade ties with the US through planned aircraft purchases.
Leadership changes have accompanied the financial strain. Garuda announced on Friday that Thomas Oentoro has been promoted to Chief Executive Officer, replacing Glenny Kairupan. Additionally, the CFO stepped down after serving for just one year amidst the mounting funding crisis. These personnel shifts occur against a backdrop of stalled consolidation efforts. A planned merger between Garuda and Pelita Air, announced earlier this year by Danantara and the State-Owned Enterprise Management Agency (BP BUMN), has been delayed beyond 2026 with no progress reported. BP BUMN Head Dony Oskaria stated that the merger was intended to improve pre-flight, in-flight, and post-flight services, including ticketing systems and catering, to enhance competitiveness in regional markets.
The delay in the Pelita Air merger is part of a broader initiative by President Prabowo Subianto to streamline state-owned enterprises, targeting a reduction from 1,077 to 350 entities by the end of 2026. Citilink has operated as a subsidiary of Garuda since 2012, and the inclusion of Pelita Air was seen as a move to strengthen the state-owned group’s market position. However, with the merger pushed past the 2026 horizon, the immediate focus remains on stabilizing Garuda’s core operations and managing the rising costs of fuel and maintenance.
