- Garuda to operate China, Hong Kong, Seoul, Sydney, Tokyo Haneda
- Jeddah excluded from international routes
Garuda has announced that it intends to operate only 5 international routes out of Jakarta in 2022 as the routes are still making a profit, according to President Director & CEO Irfan Setiapura during its third-quarter financial performance presentation.
International routes that will be operating in 2022 are Jakarta – Hong Kong, Jakarta – Sydney, Jakarta – Seoul, and Jakarta – Tokyo Haneda. The airline did not specify which part of China it intends to resume service, although it is likely to be either Beijing or Shanghai.
Routes such as Amsterdam, London Heathrow, and Nagoya have been permanently axed while Bangkok, Kuala Lumpur, Singapore, and other international destinations will be reviewed at a later date to maximize the company’s efficiency. The Jakarta-based airline is currently in the process of returning or retiring almost half of its 142-strong fleet and mulling canceling the remaining Airbus A330neo on order.
Jeddah, on the other hand, is excluded from the international routes as it will be operating exclusively as Umrah charters. The route is currently not open for booking at this time as Indonesia’s Ministry of Religious Affairs has pushed the Umrah pilgrimage to next year.
According to Irfan, the Jeddah route will only be opened when it receives assurance from the Ministry of Religious Affairs, and the Ministry is satisfied with pilgrims and agents complying with the conditions set by them.
Its domestic routes were not spared either, with Garuda aiming to discontinue unprofitable routes such as Bandung – Denpasar, and routes to Tarakan. Irfan did not discuss further what other domestic routes will be trimmed although he has hinted in a House of Representative hearing last month that 97 routes, both international and domestic will be cut.
In that same hearing, Garuda’s managements have identified routes that were generating less revenue, stating that these routes were being pressured to open even though there was no profit to be made.
State-Owned Enterprises (SOE) Deputy Minister, Kartiko Wirjoatmodjo, has described Garuda as “technically bankrupt” as the airline could not repay its U$9.78 billion debt, withholding employee’s salary and its stock, suspended since June, at risk of being delisted due to defaulting a U$500 million Sukuk payment.
Officials have lamented that years of poor management, high aircraft lease rates, flying unprofitable routes, and past corruption issues have caused Garuda to be in this state, made worse by the COVID-19 pandemic.
Garuda recently entered into a court-supervised debt restructuring process after a debt petition was successfully filed against the airline, paving the way to potentially reducing its liability to U$3.69 billion and allowing it to renegotiate leasing terms or returning aircraft to lessors with minor penalties.
The petition, filed by IT service provider Mitra Buana Kooporindo, was able to prove to the judges that Garuda owed them U$292,000, that the airline has debts to more than one creditor, and would be unable to pay its debts.
“Experience has taught us that the most appropriate approach is to operate aircraft on routes which are profitable, slowly open new routes and increase frequencies”Irfan Setiapura, Director General & CEO, Garuda Indonesia