Garuda Indonesia : Become Leading Airlines

INTRODUCTION PT. Garuda Indonesia (Garuda) is the oldest flight company in Indonesia and owned by the government. In 2010, in its 60th anniversary-an age that should enter or in mature position- it showed more losses than profit (like shown in the 5 consecutive years of financial statement). In 2006 under the new leader of Emirsyah Satar Garuda started to change its strategy to make profit. The new strategies include synergize all operation level and embedded one new value, which is team work, to achieve company’s targets. These changes resulted in profit amount to IDR 975 billion in 2008 and IDR 1.018 trillion in 2009.
In the end 2010 Garuda planning to be a public company through IPO (Initial Public Offering). In order to do that, Garuda has restructured its debt to ECA and Bank Mandiri. Repayment to Bank Mandiri will be done by exchange its debt with 10% of shares sold through IPO, while negotiation with ECA for debt restructuring has been affirmed and only wait for the final signature. Beside the big plan for IPO, Garuda faces a tight competition from the LCC flight company, because many passengers still prefer the LCC over the premium flight like Garuda. Other than premium market they serve, they also serve the LCC segment using Citilink brand, unfortunately Garuda still focus on its premium service over the LCC, which is why the number of fleet and the routes provided by Citilink is still limited. This has become the hindrance for Garuda to increase its market share as well as market leader, and this phenomenon applies for domestic and international routes. The market leader for domestic and international routes is Lion Air and Air Asia respectively. Looking at the Citilink’s performance and the trend towards LCC, Citilink is a promising business to Garuda since the increase passenger from 2008-2009 reached 277.46%.
Other than debt and competition issues, Garuda also faces trust issue comes from the labor union to the management due to financial