Garuda Indonesia continues to face deep financial distress, recording a net loss of US$319.39 million (Rp 5.2 trillion) in 2025, nearly five times larger than its 2024 loss. The recurring deficit has raised serious concerns, particularly as the flag carrier received a substantial capital injection of US$1.42 billion from state asset fund Danantara last year to stabilize its operations. Despite this financial support and multiple leadership changes, the national airline has yet to return to profitability, underscoring persistent governance challenges that have plagued it for years.

Founded in 1949, Garuda Indonesia has long symbolized national identity and connectivity, but this historical significance contrasts sharply with its recent performance. Over the past decade, the airline has been embroiled in a series of scandals, including an earnings manipulation case in 2019 and a luxury goods smuggling case in 2020, as well as allegations of bribery, corruption and money laundering related to aircraft procurement. One of the most damaging cases involved former CEO Emirsyah Satar, whose proven role in a bribery case significantly undermined Garuda’s credibility and governance standards and left the company struggling financially to this day.

These governance failures have had lasting financial consequences. Garuda struggled to meet its debt obligations, prompting government intervention in 2022 through a Rp 7.5 trillion state capital injection (PMN). This support temporarily improved its financial performance, allowing the airline to post net profits in 2022 and 2023. However, the recovery proved short-lived and Garuda returned to losses in 2024, recording a net deficit of $69 million (Rp 1.18 trillion).

Its financial health worsened in 2025, driven largely by rising operational costs primarily due to a surge in maintenance expenses, placing the airline under significant pressure. As a result, 15 aircraft operated by its low-cost subsidiary Citilink were temporarily grounded. Management attributed the losses mainly to exchange rate fluctuations and higher fixed costs associated with its fleet recovery program. A total of 43 aircraft were grounded, limiting operational capacity and constraining revenue generation.

With fewer planes in service, Garuda’s revenue declined 6 percent. On the cost side, foreign exchange losses rose sharply while maintenance costs increased 23 percent compared with 2024. These pressures further weakened the airline’s financial position.

Of Danantara’s total capital injection, approximately 64 percent (Rp 15 trillion) was allocated to support Citilink, including for the settlement of obligations to state-owned oil and gas company Pertamina. The remaining Rp 8.7 trillion was earmarked for aircraft maintenance, aimed at increasing the number of operational aircraft from 99 in 2025 to 118 by the end of 2026.

However, financial support alone has been unable to address the underlying governance issues, and leadership instability has only added to the uncertainty. In late 2024, President Prabowo Subianto appointed Wamildan Tsani, a former Air Force pilot and Lion Air Group executive, as Garuda CEO. Less than a year later in October 2025, he was replaced by Glenny H. Kahuripan, Prabowo’s close associate from the military, following a 39.3 percent year-on-year decline in Garuda’s income during the third quarter last year.

At the same time, Garuda appointed foreign executives to strengthen its management team. Former Singapore Airlines executive Balagopal Kunduvara was named finance director and Neil Raymond Mills, previously with Scandinavian Airlines, was recruited as transformation director. These appointments were intended to align Garuda’s management practices with international standards.

Nevertheless, tangible improvements have yet to materialize. Cost efficiency remains limited, with operating expenses declining only 0.7 percent amid falling revenue. Liquidity conditions also remain fragile. Even after receiving an additional Rp 12 trillion in cash, Garuda’s cash ratio stands at just 0.7, indicating that its liquid assets are insufficient to cover short-term liabilities.

Given the situation, Danantara is reportedly mulling over consolidating Garuda with Pertamina subsidiary Pelita Air in the first half of 2026. The plan aims to improve operational efficiency and create synergy across state-owned aviation assets.

However, the proposal is still ongoing. Key details, such as the structure of the consolidation and the method of financial integration, have yet to be clarified. This has raised concerns that the move could serve more as a financial rescue mechanism than a genuine efficiency-driven restructuring effort for the ailing carrier.

Ultimately, Garuda’s continuing losses point to a deeper structural issue, and that financial injections and leadership reshuffles are insufficient without meaningful governance reform. Absent stronger oversight, accountability and operational discipline, the airline risks being trapped in a cycle of recurring bailouts and underperformance.

For Indonesia, the stakes go beyond a single company. As a state-owned enterprise and national symbol, Garuda’s recovery is closely tied to broader questions about the governance of public institutions and the effective use of state resources.