PT Garuda Indonesia is planning to raise more debt and has negotiated longer payment terms with its main fuel supplier PT Pertamina, the airline said in an earnings call, as soaring oil and maintenance costs deepened losses.
The 77-year old flag carrier is looking at tapping banks, among others, to raise funds for working capital, Balagopal Kunduvara, director of finance and risk management at Garuda, said in a Wednesday call with analysts, according to a person who attended and asked not to be identified. It is also considering hedging fuel costs and will use up what remains of the $1.4 billion financing it secured last year from sovereign wealth fund Danantara over the next six months for aircraft maintenance.
Representatives from Garuda, Pertamina and Danantara did not immediately respond to requests for comment.
Garuda’s efforts to boost its finances come after the company reported that it had $624 million of cash at the end of June against $1.6 billion of current liabilities, according to its first-half financial statement released last week.
Rescuing Garuda which employs around 10,000 people is important for Indonesia, Southeast Asia’s largest economy. President Prabowo Subianto’s administration transferred the government’s 65% stake in Garuda to Danantara in March last year to help out the airline. The fund’s ownership increased to 91% after the $1.4 billion injection.
Garuda grounded about 40% of its fleet last year amid funding constraints and rising maintenance expenses and the subsequent surge in fuel prices caused by the Iran war has made its recovery more costly. The airline posted a $120.7 million loss in the first half even as revenue rose 16% to $1.80 billion. The loss pushed Garuda’s equity to a deficit of $52.2 million from a $44.4 million surplus at the end of 2025.
Garuda is operating 104 planes as of June including for sister carrier Citilink, up from 98 at the end of last year, and it spent $232 million for aircraft maintenance in the first half of the year, more than triple the amount from a year earlier.
Garuda’s situation highlights the shaky and costly path to recovery, and survival, for the loss-making carrier with oil hovering around $100 a barrel. It’s taken its toll on the airline’s stock which slid to a 16-month low this week and has lost 47% this year. Prabowo has said he hoped Garuda would become profitable next year.
Other airlines are facing similar challenges. Budget carrier AirAsia Group Bhd., which reported losses for two straight quarters, has more liabilities than assets. The industry’s biggest casualty so far has been US low-cost carrier Spirit Aviation Holdings Inc. which ended operations in May amid soaring fuel prices and the failure of a government bailout.