Billionaire Chairul Tanjung's-backed Garuda Indonesia secures a $408 million loan from Danantara.
In a move to bolster the flag carrier's turnaround, state-owned enterprise Garuda Indonesia has secured a generous loan of 6.65 trillion rupiah ($408 million) from Indonesia's sovereign wealth fund, Danantara Indonesia. This financing package forms part of a broader $1 billion support aimed at aiding Garuda's recovery and sustaining growth.
The initial phase of this financial boost comes in the form of a shareholder loan of $405 million, channeled through Danantara Asset Management (DAM). The majority of this loan, approximately 70%, will bolster the low-cost carrier Citilink, ensuring critical maintenance, repair, and overhaul (MRO) activities for its fleet and grounded jets.
The remaining portion of the loan will directly augment Garuda Indonesia's operational capabilities. According to Wamildan Tsani, president director of the airline, this support is instrumental in positioning Garuda as a world-class player amidst the global aviation industry.
Garuda Indonesia, a cooperation between the government and billionaire Chaturl Tanjung, has historically grappled with considerable debt and financial struggles. Despite restructuring a massive $10 billion in debt in 2023, the airline still required government backing to navigate difficult financial waters. Despite recording a revenue increase of 16% to $3.4 billion last year, Garuda's net loss stood at $69 million compared to the previous year's net profit of $252 million.
Tanjung, estimated to have a net worth of $4.3 billion by Forbes, holds an 8% combined stake in Garuda through his companies Trans Airways and a direct stake. Through his diversified conglomerate, CT Corp., Tanjung oversees businesses stretching from credit cards, hypermarkets, TV station ownership, to Indonesia's largest digital bank, Allo Bank Indonesia.
In a seemingly strategic move, Tsani, a seasoned airline executive from rival Lion Air, took over as Garuda Indonesia's CEO in November 2022. The appointment marks an effort to reverse the company's loss-making trajectory. With this injection of capital, Garuda aims to bring its fleet size from the current 98 aircraft, as of March 2025, to 120 aircraft within the next five years, reflecting a promising vision for the future of Indonesia's national airline.
Chairul Tanjung, with his vast business empire CT Corp, will see a portion of the loan directly contribute to strengthening the operational capabilities of Garuda Indonesia, the national airline he also has a stake in. This financial support, alongside Tanjung's diversified investments in Indonesia's commercial sectors like credit cards, hypermarkets, and banking, is expected to play a significant role in bolstering the airline's position amidst stiff competition in the global aviation industry.
