Garuda Indonesia’s plans to expand its fleet are under threat following a $150 million reduction in funding from Danantara, the state-owned investment arm that supports the airline. The move underscores ongoing financial instability for the carrier since the pandemic.
- Danantara reduced funding to Garuda Indonesia by $150 million in late October 2025
- Three Airbus A330-900s and two Boeing 787-9s are delayed until 2027
- Garuda reported a $430 million net loss in 2024 and $3.2 billion in total debt
- International passenger traffic dropped 40% in first half of 2025
- Garuda’s bond yield rose to 12.8% in November 2025
- Stock price down 35% year-to-date, trading at IDR 1,240
Garuda Indonesia has halted its planned fleet modernization after Danantara, Indonesia’s state-linked investment company, reduced its capital commitment by $150 million. The funding cut, confirmed in late October 2025, affects the acquisition of three new Airbus A330-900s and two Boeing 787-9 Dreamliners, delaying delivery until at least 2027. The airline had previously projected a 20% increase in capacity by 2026, but revised plans now target only a 6% growth, primarily through fleet optimization rather than expansion. The financial strain stems from a series of post-pandemic challenges, including a $430 million net loss in 2024 and a debt load exceeding $3.2 billion. Despite restructuring efforts, including a 30% reduction in staff and the divestment of non-core assets, the carrier remains reliant on government-backed financing. Danantara’s decision reflects concerns over Garuda’s ability to service existing debt, particularly after a 40% drop in international passenger traffic during the first half of 2025. The funding reduction has triggered a reassessment of Garuda’s long-term strategy. The airline is now prioritizing cargo operations and regional route optimization, with plans to reallocate funds toward engine maintenance and fuel efficiency upgrades. Market analysts note that without the new widebody aircraft, Garuda may struggle to compete with regional carriers like Singapore Airlines and Vietjet Air on long-haul routes. Investors and creditors are watching closely. Garuda’s bond yield spiked to 12.8% in November 2025, up from 8.4% in January, reflecting heightened risk perception. The company’s stock, trading at IDR 1,240 per share (down 35% YTD), reflects investor skepticism about its recovery path. The situation has also prompted regulatory scrutiny from Indonesia’s Ministry of Transportation, which is evaluating a potential restructuring plan.