💼 Brief Take: Garuda Indonesia’s Saudi Venture
The Indonesian president ordered Garuda to explore a joint venture with Saudi Arabia’s flag carrier for Muslim pilgrimages.
Indonesian President Prabowo Subianto has ordered Garuda Indonesia to explore a joint venture with Saudi Arabia’s flag carrier Saudia to increase the flight efficiency for Muslim pilgrimages, CNN Indonesia reported on 8 April 2026.
Eveline’s Take
The president reportedly said that Indonesia and Saudi Arabia should create a 50-50 joint venture to fill the flights between both nations, potentially cutting airfares and travel duration.
His suggestion may make sense on paper – and I did write last year that a joint venture with a Middle Eastern airline might be an easier pitch in Indonesia, which has the world’s largest Muslim population.
However, any traction depends on whether Saudi Arabia would seriously consider the proposed joint venture. The reality is Garuda needs the partnership more than Saudia, which is financially and operationally stronger than the Indonesian airline.
I wrote on 26 March 2026 that the capital injection from sovereign fund Danantara may dry up faster than expected because of the triple whammy on Garuda: 1) a jump in oil prices, 2) higher repair and maintenance costs as a result of the weaker rupiah, and 3) reduced earnings because of its grounded planes.
Garuda said on 8 April 2026 that it will raise airfares because of the hike in fuel surcharges, Tempo reported, without specifying which routes will be affected. The flag carrier will likely try to avoid a major increase in pilgrimage fares given the political sensitivity in Indonesia.
Garuda also continues being weighed down by costly leases, some of which are long-term agreements struck by past managements.
I flagged a year ago that a new round of debt restructuring would be challenging for Garuda as it had gone through three major restructurings and was running out of carrots to offer creditors. Garuda’s latest deal was a local in-court restructuring (PKPU) in 2022 and the airline risks being filed into bankruptcy if it breaches this agreement.
Airlines around the world are facing a similar struggle because of the oil spike, but Garuda has even less room to manoeuvre compared to its peers.
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