Garuda Indonesia Confirms Recovery Strategy, Hunts Whistleblower

Indonesia’s Stock Exchange has requested further information on Garuda Indonesia’s financial health following the leaking of a talk to employees from the airline’s CEO Irfan Setiaputra. In that online chat, Mr Setiaputra said the Indonesian flag carrier was in considerable strife.

Garuda Indonesia Confirms Recovery Strategy, Hunts Whistleblower
The Indonesian Stock Exchange has asked Garuda Indonesia to please explain its CEO’s comments. Photo: Getty Images

“We have to go through a comprehensive restructuring, a total one,” Simple Flying has previously reported Mr Setiaputra saying in that town hall-style meeting with Garuda employees in mid-May.“Failure to carry out the restructuring program could result in the company being terminated suddenly.”

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Garuda Indonesia CEO confirms what is widely known

It is no secret Garuda Indonesia is in a sorry state. It presently holds around US$4.9 billion in debt. That debt is growing by $70 million a month. The airline is yet to publish financial results for calendar 2020 but reported a loss of $1.07 billion in the nine months to September 30, 2020.

The most recent hard operational data available covers February. Garuda Indonesia flew 856,165 passengers in February, down 57% on February 2020 traffic figures. There were 13,824 Garuda Indonesia flights in February compared with 16,426 in February 2020. Average passenger loads across the Garuda Indonesia Group were 30% in February compared with 64% twelve months previously.

According to aircraft database ch-aviation, 85 (or 59.9%) of Garuda Indonesia’s 142 planes are not flying.

Last week, Yenny Wahid, a Garuda Indonesia Commissioner (Director) and daughter of former Indonesian President Abdurrahman Wahid, said this about Garuda Indonesia:

“Currently, we are struggling so that Garuda is not bankrupt,” Ms Wahid posted online. “Garuda’s problems inherited problems are enormous, ranging from corruption cases to inefficient costs. It must be saved.”

Yenny Wahid went on to ask for “thoughts and prayers” to help save Garuda Indonesia. The Indonesian Stock Exchange (ISE) might want something more concrete than that. The ISE reached out to Garuda Indonesia for an “explanation” regarding Mr Setiaputra’s comments. The ISE has a role supervising listed companies in Indonesia. While Garuda Indonesia is majority state-owned, around 40% of the airline is in private hands.

Garuda Indonesia’s CEO Irfan Setiaputra. Photo: Getty Images

Indonesian Stock Exchange asks Garuda Indonesia to please explain

On May 24, the ISE wrote to Garuda Indonesia requesting an explanation regarding reports the airline would halve its fleet and begin offering early retirement to employees. The ISE asked Garuda to confirm whether comments made in the mid-May chat by Irfan Setiaputra were “valid.”

Garuda Indonesia said Mr Setiaputra’s comments were directed at airline staff only and not meant for public circulation. Irfan Setiaputra was trying to give employees a “broad overview” of the airline’s current state. Garuda Indonesia is unimpressed their CEO’s talk leaked and is now hunting for the culprit, saying they are investigating the unauthorized recording and distribution.

The ISE wants to know if the comments made by Irfan Setiaputra are correct. Photo: Getty Images

Garuda Indonesia confirms a suite of measure to save airline are underway

But Garuda Indonesia did confirm they would start offering employee redundancies in July and is making efforts to “align supply and demand.” Also on the cards is a new focus on cargo to boost cargo revenue from about 12.5% of Garuda Airlines Group revenue to around 40%. The airline also confirmed negotiations with lessors regarding aircraft leases were ongoing. The airline leases 128 aircraft, including 25 from Nordic Aviation. Talks with on-the-hook lending banks and financial institutions also continue.

The airline says there are three viable options on the table – a debt restructure, government bailouts, or liquidation. The first option is the preferred choice. That last option the least desirable and one Garuda’s bosses are desperately trying to avoid.