National flag carrier Garuda Indonesia is to halve its fleet to survive the pandemic. It is considering cutting its A330 orders and reducing the number of wide-body jets in its fleet to survive the pandemic. It is said the carrier is also considering halving its number of Boeing 777-300ER jets.
It will also seek a suspension of debt payments to creditors and lessors under a ‘standstill agreement’ in order to avoid bankruptcy, a senior government official said this week.
Garuda has outstanding orders for nine A330-900s and four A330-800s, according to Airbus’ O&Ds list. The state-owned carrier operates 10 Boeing 777-300ERs and 27 planes from the A330 family, which are mostly used for international routes. Before the pandemic started, it seems 90% of the group’s fleet was leased, making the airline even more unstable with a lot of planes grounded since the pandemic hit.
Garuda Indonesia CEO Irfan Setiaputra told staff of a comprehensive restructuring that’s needed in order to survive, stating that “if this isn’t done, it could result in an abrupt end of the company. We have to go through a comprehensive restructuring, a total one. We have 142 aircraft and our preliminary calculation on how we see this recovery has been going, we will operate with a number of aircraft no more than 70.”
That plan for just 70 aircraft refers specifically to mainline Garuda Indonesia aircraft and not those of subsidiaries. In recent weeks the airline was unable to fly all its planes due to a lack of payments to lessors. The carrier would connect Indonesia with international flights such as Melbourne, Sydney, Tokyo, and Amsterdam.
In its strategy, Garuda Indonesia is planning to significantly boost its cargo revenue in the near-term, as part of more efforts to stem its losses amid the coronavirus outbreak and disclosed on 27 May that it hopes to increase revenue from cargo to about 40% — up from 10-15% — of its total revenue.