Garuda Plans Rp 30.5 Trillion Private Placement to Restore Equity and Strengthen Citilink
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JAKARTA, Investortrust.id — Garuda Indonesia has unveiled plans for a Rp 30.5 trillion private placement to restore its equity, strengthen its balance sheet, and accelerate Citilink’s expansion. The transaction, valued at about US$ 1.85 billion, marks one of the airline’s largest recapitalization efforts since its restructuring.
Garuda Indonesia (Persero) Tbk, or GIAA, will issue around 407.9 billion new shares at an exercise price of Rp 75 per share. Of the total funds, about US$ 1.44 billion will come from cash injections, while US$ 405 million will be converted from shareholder loans. The airline has scheduled an Extraordinary General Meeting of Shareholders on Wednesday, Nov 12, 2025, to seek approval for the plan.
According to Head of Research at Kiwoom Sekuritas Indonesia Liza Camelia Suryanata, the capital injection is designed to reinforce Garuda’s financial base and support operational recovery. She said the fresh funds will provide the momentum needed for expansion after years of restructuring pressure.
Garuda plans to allocate 29% of the funds for working capital and operations, 37% for increasing capital in Citilink to restore fleet and liquidity, 22% for expanding both Garuda and Citilink’s fleets with a target of more than 100 aircraft by 2029, and 12% to help Citilink settle its fuel payment obligations to Pertamina.
Financially, the transaction represents a crucial turning point. As of June 30, 2025, Garuda’s equity was still negative at around US$ 1.5 billion, but the private placement could bring it to a positive US$ 350 million. This improvement may allow the airline to qualify for removal from the Indonesia Stock Exchange’s full call auction board, provided all other regulatory criteria are met.
Garuda’s liquidity and solvency are also expected to improve significantly. Cash and cash equivalents would rise by roughly US$ 1.44 billion, the current ratio would climb from 0.44x to 1.53x, and the debt-to-asset ratio would fall from 123% to 96%. The company aims to turn its working capital position positive for the first time since restructuring.
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The conversion of shareholder loans worth US$ 405 million into equity will immediately reduce Garuda’s interest-bearing liabilities. The loans were gradually extended between June and September 2025, totaling Rp 6.65 trillion. As a result, interest expenses will decline, giving Garuda greater breathing room to operate and expand.
With a substantial portion of the proceeds earmarked for Citilink and fleet expansion, the airline expects better fleet utilization and service reliability. Higher utilization could lift load factor and yield, though profitability will still depend on cost efficiency, jet fuel prices, exchange rates, and demand recovery.
Liza said the move will improve Garuda’s leverage profile and expansion capacity. “The debt-to-equity swap and cash proceeds will enhance solvency and open room for gradual growth, such as adding new aircraft and routes. But profit recovery will still depend on operational execution and market conditions,” she explained.
Kiwoom Sekuritas noted potential risks, including execution challenges and heavy dilution for existing shareholders. “Retail investors should wait for clarity from the shareholders’ meeting, details on cash contributions and conversions, pro-forma financials, and visible operational improvements, such as load factor, punctuality, yield, and route planning,” Kiwoom’s report stated.
The firm emphasized that the private placement could mark a genuine restructuring milestone if executed with discipline. The US$ 1.85 billion transaction could restore positive equity of about US$ 350 million, lift the current ratio to around 1.5x, and reduce liabilities through the US$ 405 million debt conversion.
“Shareholder value will only materialize if, after the Nov 12 meeting, management enforces strict cost control, maximizes fleet utilization, and strengthens governance,” Liza said.
Key performance indicators to watch include annual reduction in CASK ex-fuel (cost per available seat kilometer excluding fuel), maintaining a consistent load factor above 80%, on-time performance exceeding 85%, and sustained yield per RASK (revenue per available seat kilometer) improvement not driven solely by fuel surcharges.
Further indicators include positive operating cash flow per quarter, controlled capital expenditure, and gradual reduction of net debt-to-EBITDA. Contract renegotiations with lessors, maintenance partners, and fuel suppliers will also play a crucial role in achieving lasting efficiency gains.
“Global airlines can be profitable through capacity discipline and cost efficiency. Garuda can do the same if governance and execution are tightened, not just discussed,” Liza concluded.