Garuda Indonesia, the national flag carrier, finds itself at a critical juncture in 2022. Despite past restructuring efforts, the airline continues to grapple with persistent challenges, including mounting debt, high operational costs and declining revenues, further exacerbated by the COVID-19 pandemic. CEO Irfan Setiaputra must devise a turnaround strategy to address these issues and save the airline from bankruptcy. Garuda's struggles are not new. Established in 1949, it was once Indonesia's dominant airline, supported by the government’s protectionist policies. However, deregulation of the industry in the 1990s exposed the company’s inefficiencies, leading to financial distress. Subsequent restructuring in 1998 and 2005 temporarily restored stability but failed to resolve systemic issues such as weak operational efficiency, an overdependence on international routes, and mismanagement. Compounding its woes, Garuda faces fierce competition from low-cost carriers and Southeast Asian peers like AirAsia and Singapore Airlines. The airline's load factor of 74% lags regional competitors, while its large fleet of leased aircrafts, rising maintenance costs and management instability have worsened its financial predicament. Now, with the government reluctant to provide further bailouts, Irfan faces the unenviable task of crafting a sustainable turnaround plan. Will his strategy finally break Garuda’s cycle of crises?
This versatile case can be used in courses on Turnaround, Competitive Strategy, and Corporate Strategy.
- Turnaround
- Restructuring
- Corporate Strategy
- Competitive Strategy
- Financial Strategy
- Airlines
- Aviation
- Indonesia
- Q12025
