Jakarta. Indonesia’s sovereign investment arm, Danantara, will channel $1.84 billion (Rp 30.5 trillion) into national carrier Garuda Indonesia (GIAA) through a combination of private placement and debt conversion, aiming to stabilize finances and strengthen operations.

Garuda stated that Danantara will inject $1.441 billion in fresh capital through its subsidiary Danantara Asset Management (Persero) by subscribing to newly issued shares. At the same time, existing shareholder debt of $405 million will be converted into equity under a June 2025 loan agreement, bringing the total private placement to $1.85 billion.

Garuda’s management said the capital infusion follows the 2022 rescue efforts, which successfully trimmed debt and bolstered equity. Operational improvements have included optimizing route networks, rationalizing the fleet mix, renegotiating lease contracts, and increasing revenue from cargo and ancillary services.

Despite these measures, the airline posted a net loss of Rp 2.39 trillion in the first half of 2025, up from Rp 1.69 trillion a year earlier. Total revenue fell 4.5 percent to Rp 25.76 trillion from Rp 26.97 trillion. While overall operating expenses edged down slightly to Rp 25.04 trillion, salary costs rose 3.8 percent to Rp 1.37 trillion. On the balance sheet, assets dropped 1.6 percent to Rp 108.42 trillion, while liabilities increased 0.5 percent to Rp 133.32 trillion.

Challenges persist. A second rights issue to strategic investors has yet to materialize, and Garuda has not achieved sustained positive equity, limiting access to external funding and raising delisting risks. Rising aircraft maintenance and restoration costs continue to pressure performance, particularly at Citilink. The prior restructuring did not fully cover all subsidiaries, and passenger traffic recovery has lagged initial projections.

The private placement proceeds will be allocated as follows: 29 percent for Garuda’s working capital and aircraft maintenance; 37 percent to boost Citilink’s operational and maintenance capital; 22 percent for fleet expansion across both airlines; and 12 percent to fund Citilink’s repayment of fuel purchase debts to state energy firm Pertamina from 2019–2021.

Investors reacted positively. GIAA shares surged 9.09 percent to Rp 96, hitting the upper auto-rejection limit on Wednesday, with total trading of Rp 38.05 billion for 396.3 million shares. The stock has risen 39.13 percent over the past month and 74.55 percent year-to-date.

“Utilization of this private placement is expected to positively impact consolidated equity, strengthen the capital structure, and support the long-term viability of both the parent company and its subsidiaries,” Garuda said.