Indonesia’s state-owned flag carrier Garuda Indonesia has adjusted the structure of its planned non-preemptive share issuance to $1.4 billion, down from the initial $1.8 billion, due to a lower capital commitment from its anchor investor and a shift in how the proceeds will be deployed, according to its filing with IDX.
The company now expects to raise about 23.67 trillion ($1.4 billion) through a combination of fresh equity from PT Danantara Asset Management (DAM) and a partial conversion of DAM’s existing loans into shares.
Garuda said the exercise is aimed at improving its balance sheet following its restructuring process. The disclosure notes that the transaction is intended “to improve the company’s consolidated equity, strengthen liquidity and capital structure by reducing liabilities, and support business continuity with a more sustainable financial foundation going forward.”
With the lower proceeds, Garuda will no longer allocate funds for expanding its fleet. Instead, resources will be used to stabilise operations across Garuda and its low-cost subsidiary Citilink.
Under the updated allocation, around 37% of the funds will be used for Garuda’s working capital and aircraft maintenance needs. The remaining 63% will flow to Citilink, with about three-quarters earmarked for operational and maintenance costs and the rest for settling fuel-related payables to Pertamina.
The company said the heavier allocation to Citilink reflects the unit’s operating condition, citing “the unit’s tighter operational posture and the number of aircraft that remain grounded.”
The disclosure also explains that support for Citilink is intended “to avoid strategic risks and social impacts on the public,” including potential reductions in domestic route capacity and higher airfares if operational capacity remains constrained.
As of the first half of 2025, the airline reported an operating profit of $43.48 million. Flight operations (scheduled + non-scheduled) posted a $42.78 million loss; maintenance (PT Garuda Maintenance Facility Aero Asia Tbk/GMF) made $15.39 million, and other businesses (catering, travel, hotels) made $70.87 million.
DAM’s loan to the airline, amounting to about 6.65 trillion rupiah, will be converted into equity as part of the exercise. Post-transaction, Garuda expects a sharp decline in the free float while public ownership is projected to fall to approximately 5%, below the bourse’s 7.5% minimum threshold.
The company acknowledged that it will take steps to restore the minimum free float requirements “either through the sale of a portion of the shares currently held by shareholders, or by adjusting the amount offered to the public in the next capital increase, or through other corporate actions taking into account market conditions.”
The company emphasised that the private placement route remains the most practical option for restoring equity and ensuring operational continuity in the near term, particularly as it seeks to gradually bring more aircraft back into service.
