Garuda Indonesia will slash its international network to just five routes, abandoning Europe and much of Asia, with the beleaguered carrier focussing on only a handful of destinations where it sees a clear profit.
Which cites survived the axe? Sydney, Hong Kong, Tokyo, Seoul and one yet-to-be-determined city in China.
The far-flung and previous ‘flagship’ destinations of London and Amsterdam, along with neighbouring Kuala Lumpur, Singapore and Bangkok will be among the cities wiped from Garuda’s network.
“Experience teaches that the most appropriate approach is to operate aircraft on profitable routes, slowly opening other routes and increasing the frequency," noted President Director of Garuda Indonesia Irfan Setiaputra in a presentation this week on the beleaguered carrier’s financial position.
(Irfan said Garuda plans to recommence flights to Jeddah, including the Umrah pilgrimage service, pending government confirmation of travel requirements.)
The Indonesian flag carrier and SkyTeam alliance member remains on the brink of bankruptcy following ongoing losses, with the Covid-19 pandemic appearing to be the final domino.
Even before the pandemic decimated the global airline industry, Garuda had been struggling to stay profitable. The impact of corruption in the procurement of aircraft and engines, aggressive fleet expansion and high costs have contributed to annual net losses since 2017.
Garuda this month has entered a court-supervised process to restructure its US$9.8 billion debt, which among other things will let the airline renegotiate leasing terms or return planes to aircraft lessors with the smallest penalties possible.
As previously reported, Garuda is looking at canceling orders for the newest version of the Airbus jet – the A330neo – and returning some of its leased A330s, as well as halving its 10-strong fleet of Boeing 777-300ER jets.
From January 2022 Garuda will enter a ‘codeshare’ alliance with Emirates covering some 18 international routes in Europe, Africa, the Americas and the Middle East, with both airlines also exploring “opportunities to cooperate on their respective frequent flyer programs to enable customers of both airlines to earn and redeem loyalty points for reward tickets, upgrades and other exclusive benefits.”
Additional reporting by Bloomberg