PT Garuda Indonesia (Persero) Tbk

Beginnings

The earliest predecessor to Garuda Indonesia was KNILM, Royal Dutch Indies Airways, founded in 1928 during the Dutch colonial period; despite the similar name, it was not a subsidiary of the main Dutch carrier KLM. KNILM was dissolved in 1947, and its assets were transferred to a new KLM subsidiary, KLM Interinsulair Bedrijf , which was nationalized in December 1949.In its current institutional form, Garuda Indonesia had its beginnings in the Indonesian war of independence against the Dutch in the late 1940s, when Garuda flew special transports with a Douglas DC-3. The first aircraft was a DC-3 known as Seulawah and was purchased for a sum of 120,000 Malayan dollars, which was provided by the people of Aceh . The first commercial flight from Calcutta to Rangoon was made on 26 January 1949, using a DC-3 Dakota aircraft with the tail number of "RI 001" and the name "Indonesian Airways". 26 January 1949 is generally recognized as the airline's founding date.

The name Garuda is taken from the Hindu tradition, which is the name of Lord Vishnu's mount and was introduced in 1949. During the Dutch–Indonesian Round Table Conference at The Hague, from 23 August to 2 November 1949, Indonesian President Sukarno cited a Dutch poem written by a renowned Javanese scholar and poet Raden Mas Noto Soeroto: "Ik ben Garuda, Vishnoe's vogel, die zijn vleugels uitslaat hoog boven uw eilanden", which means "I'm Garuda, Vishnu's Bird, that spreads its wings high above the Islands". The first flight under the name of "Garuda Indonesian Airways" was made with a second DC-3 entering service in 1949: Its first flight, under the new name, carried Sukarno from Jakarta to Yogyakarta on 28 December.Throughout the revolution, Garuda supported national interests and often carried diplomats on its flights. The Burmese government helped the airline significantly during its beginnings. The country's national airline, Union of Burma Airways, often chartered one of the airline's DC-3s for its own flights. Accordingly, upon Garuda's formal joint incorporation with KLM on 31 March 1950, the airline presented the Burmese government with a DC-3 as a gift.

By the early and mid-1950s, the airline operated a fleet of 38 aircraft, which included 22 DC-3s, 8 Catalina seaplanes, and 8 Convair 240s, and in 1956, the airline operated its first flight to Mecca with Convair aircraft, carrying 40 Indonesian pilgrims.The airline's fleet continued to grow throughout the 1960s, during which time the airline continued its expansion. It acquired three Lockheed L-188 Electras in 1961, which supplemented its Convair CV-240 fleet, before taking delivery of its first jet aircraft, the Convair 990 Coronado, in 1963, which allowed it to launch flights to Hong Kong.

In 1965, the airline took delivery of its first Douglas DC-8, and grew beyond the Asian market it was focused on, beginning scheduled flights from Kemayoran Airport to Amsterdam and Frankfurt via Colombo, Bombay, and Prague. Rome and Paris became the airline's third and fourth European destinations, with flights stopping in Bombay and Cairo to refuel. Flights to the People's Republic of China began that same year, with service to Guangzhou via Phnom Penh, the first Indonesian airline to do so.

Continued growth

During the early 1970s, Garuda Indonesia took delivery of both the McDonnell Douglas DC-9 and Fokker F28 Fellowship for its short and medium-haul operations. The airline went on to take delivery of 62 F28s, holding the title for the largest operator of the F28 in the world. In 1976, the airline took delivery of its first McDonnell Douglas DC-10, giving it the capability to carry more passengers and fly longer flights, and it replaced the DC-8 and Convair 990 fleet on flights within Asia and to Europe. The DC-10 would become an integral part of the Garuda fleet for the years to come, outlasting the newer McDonnell Douglas MD-11s, before the type was finally retired in 2002. Afterwards, in 1980, the airline took delivery of the first Boeing 747-200, complementing the DC-10 on high-capacity or long-range routes.

On 21 June 1982, Garuda became the launch customer of the Airbus A300 B4-220FFCC, which was the first variant of the A300 capable of being operated with two pilots instead of three. By 1984, nine of these were in service, supplemented by 8 McDonnell Douglas DC-10s, 24 DC-9s, 45 Fokker F-28s, and 6 Boeing 747-200s. In 1985 under Reyn Altin Johannes Lumenta, who had been CEO since 1984, Garuda made the controversial decision to hire foreign brand consultants Landor Associates to create a new logo, livery and brand for the airline, a project that was regarded as expensive and unnecessary at the time. However, this move was later on applauded as vital for the reputation and corporate identity of Garuda Indonesia as the national airline.

Under Lumenta, Garuda also increased the number of flight frequencies and destinations, reduced ticket prices and collaborated with Merpati Nusantara Airlines, introducing flexible tickets valid for both Indonesian airlines.In 1990, the airline took delivery of the McDonnell Douglas MD-11s, which gradually replaced the DC-10 on flights to Europe, and also allowed the airline to launch flights to Los Angeles via Honolulu. During this time, the airline operated a fleet of the aforementioned MD-11s, DC-10s, 747, Airbus A300 and Boeing 737-400, operating it to destinations throughout Asia, Europe and North America. In 1994, the airline took delivery of its first Boeing 747-400 aircraft, which would go on to become a mainstay of its fleet until 2015, operating hajj flights and high-density short-haul routes, while the delivery of the first Airbus A330-300 in 1996 allowed more flexibility for the airline, as it was more fuel-efficient than the three- and four-engine jets. That same year, the airline placed an order for six Boeing 777 aircraft, due for delivery in 2000, however, a new series of challenges and difficulties were about to hit the airline.

Difficult period

The late 1990s and early 2000s would prove to be a turbulent and difficult time for the airline; two separate accidents in Fukuoka in 1996 and Medan in 1997 added to the problems being caused by the 1997 Asian financial crisis, resulting in a drastic reduction in operations, including the termination of service to the Americas and a massive scaling back of its European operations. Largely due to historical links with the Netherlands, Garuda continued to operate flights to Amsterdam after the initial cutbacks. The other European routes continued were Frankfurt and London. However the flights to Frankfurt and London were discontinued in 2003. While the Amsterdam route was discontinued on 28 October 2004. The situation was exacerbated by the 11 September 2001 terrorist attacks in the U.S., the Bali bombings, the 2004 Indian Ocean earthquake and tsunami, and the SARS scare, all of which contributed to a downturn in air travel and Indonesian tourism. As a result, its earlier order for the Boeing 777 was deferred, and so was an order for 18 Boeing 737-800s to replace its ageing 737 Classic fleet. However, by 2005, the airline had largely recovered from its economic problems, swapping its order for six Boeing 777-200ERs for 10 Boeing 787-8 Dreamliners in 2005, but its operational problems would remain.

Munir murder

On 7 September 2004, Garuda's reputation suffered further damage when human rights activist Munir Said Thalib, traveling to Amsterdam via Singapore on Garuda Indonesia Flight 974, was assassinated by off-duty pilot Pollycarpus Priyanto, who slipped arsenic into his drink some time before the departure of the flight's second leg to Amsterdam. Munir was reported to have felt unwell several hours after departure from Singapore, during which time he was checked on by a doctor who happened to be on board, and moved to the business class cabin to sleep. He died approximately two hours before arrival into Amsterdam, sparking an international controversy, during which time Priyanto, along with CEO Indra Setiawan and deputy Rohainil Aini, were all convicted of his murder, although it has been alleged it was under orders from the Indonesian State Intelligence Agency . The airline was found negligent in failing to perform an emergency landing and was ordered to pay compensation to Munir's widow, but failed to do so.

European ban

In June 2007, the EU banned Garuda Indonesia, along with all other Indonesian airlines, from flying into any European countries, following the crash of Flight 200 earlier that year. With the support of the international aviation industry for all Indonesian airlines, the EU promised to review its ban and sent a team of experts, led by the European Commission's Air Safety Administrator Federico Grandini to Indonesia to consider lifting the ban. In August 2007, the transportation minister of Indonesia announced that the EU would lift its ban hopefully sometime in October, stating that the ban was attributed to communication breakdown between the two parties and that discussions were in progress.

In November 2007, Garuda announced its intention to fly to Amsterdam from Jakarta and Denpasar with either Airbus A330 or Boeing 777 aircraft if the EU lifted its ban, however, on 28 November 2007, the EU stated that the safety reforms already undertaken were a step in the right direction for the EU to consider lifting the ban, but still did not satisfy the EU's aviation safety standards, and thus, did not lift its ban. The ban was lifted in July 2009, after which Garuda began evaluating service to Amsterdam and other European destinations, as well as the United States.

Developments after lifting of ban

Following the lifting of the EU ban against Garuda Indonesia and three other Indonesian carriers, the airline announced in July 2009 an aggressive five-year expansion plan known as the Quantum Leap. The plan involved an image overhaul, including changing the airline's livery, staff uniform and logo, and nearly doubling the size of its fleet from 62 to 116. The Quantum Leap also plans to boost annual passenger numbers to 27.6 million in the same period, up from 10.1 million at the time of program launch through increasing domestic and international destinations from 41 to 62. Route expansions included Amsterdam, with a stopover in Dubai, in 2010. As of 2014, Garuda flies to Amsterdam non-stop five times a week using a Boeing 777-300ER with continuing service to London, with the sixth weekly service to be added by the end of 2015. Other European and American cities such as Frankfurt, Paris, Rome, Madrid and Los Angeles are being considered for reopening.As part of the Quantum Leap, the airline refreshed its logo and redesigned its livery in 2009, more than 20 years after the last update. New uniforms were introduced in 2010. In 2010, the airline placed a firm order for six additional Airbus A330s at the 2010 Farnborough Airshow, while it opened a new hub at Sultan Hasanuddin International Airport, Makassar, South Sulawesi to increase services to the eastern part of Indonesia on 1 June 2011, its third after Jakarta and Denpasar.

In 2013, Garuda's won the Skytrax World's Best Cabin Crew Awards, and in 2018, Garuda's won the awards again for the fifth consecutive year.

During this period, the airline also added additional frequencies to many of its international routes, including to Singapore, Bangkok, Beijing and Shanghai from Jakarta, while it also added capacity to Denpasar-Seoul.

At the Paris Air Show 2011, Garuda Indonesia announced a firm order of 25 Airbus A320s with an option for another 25. All 25 Airbus A320s are to be used by their subsidiary, Citilink The airline's earlier order for the Boeing 787, made in 2005, was changed once more, due to the delays in the 787's entry into service. Garuda opted to sign for 10 Boeing 777-300ERs instead, which it would take delivery of in 2013 to use on long-haul flights to Europe, and medium-haul flights within Asia, such as to Japan, China, Singapore and Saudi Arabia, as well as short-haul domestic routes between Jakarta and Denpasar.

The airline made its debut on the Indonesia Stock Exchange in February 2011, with the government of Indonesia retaining a majority of the shares. PT Trans Airways bought 10.9% stake of Garuda Indonesia unsold IPO shares from underwriters on 27 April 2012. The transaction was valued at Rp 1.53 trillion .

In late 2014, the airline became one of seven airlines to earn the prestigious 5-star rating from Skytrax, marking the end of the 5-year Quantum Leap program. Following this announcement, Emirsyah Satar, who had been CEO for the past nine years, announced his resignation and retirement and promoted former Citilink chief Arif Wibowo as his successor.

Following Wibowo's promotion, he began a "Quick Wins" cost-cutting drive to cut down on losses while boosting revenue through various measures, including cancelling unprofitable routes and increasing staff efficiency. Despite this, Wibowo remained committed to continuing the airline's international expansion, particularly once market conditions, such as the weakening rupiah, improved. This was reaffirmed following the airline's announcement of its intent to order 90 new aircraft, from both Boeing and Airbus, worth $20 billion at list prices at the 2015 Paris Air Show. Wibowo retired from his position in 2017, replaced by Pahala Nugraha Mansury the same year before being replaced by I Gusti Ngurah Askhara Danadiputra, otherwise known as Ari Askhara in 2018.

During Ari Askhara's leadership, Garuda introduces live acoustic concerts on domestic flights, which lead to criticism. as well as reopening the London route from Denpasar, with transit in Medan's Kualanamu International Airport. It also hit with three high-profile scandals.

In April 2019, Chairal Tanjung and Donny Oskaria, Independent Commissioners of the airline called out that Garuda's 2018 Annual Report is not in accordance with the Statement of Financial Accounting Standards, thus decided not to sign the report. Both Ministry of Finance and Financial Services Authority found various violations inside the report as both Independent Commissioners told the public, which lead to both regulators impose a penalty to the airline and auditors involved.On 13 July 2019, travel reviewer and YouTuber Rius Vernandes shared a picture of a hand-written menu during his flight from Sydney to Jakarta, which leads to Garuda's management reporting the YouTuber to the police followed by the airline issuing a regulation prohibiting selfies on the plane and a lawsuit prompted by Garuda's workers' association also known as SEKARGA. Both Garuda's and SEKARGA's action were panned and criticized by worldwide netizens. Through mediation, Rius and Garuda buried the hatchet, and SEKARGA pulled the lawsuit on 19 July 2019.

Controversy during the leadership of Ari Askhara

On 5 December 2019, Ari Askhara was fired from his position for smuggling a classic Harley-Davidson motorcycle and Brompton folded bicycle. The motorcycle and bicycle were found by the Soekarno–Hatta International Airport's Customs and Excise team inside a recently-delivered Airbus A330-900 aircraft. It was revealed that Ari Askhara and other directors had been implementing various policies that harmed Garuda flight attendants, such as mutation without explanation, additional flight hours, and discrimination between employees. These policies have since been revoked.A year later in December 2020, it was revealed through Twitter that many Garuda flight attendants had been victims of sexual harassment and coercion to prostitution during Ari's leadership, with many attendants confirming that VP Cabin Attendant Roni Eka Mirsa was the pimp for the prostitution circle. Police responded by investigating the whistleblower in the case for defamation after a report was filed by an air hostess who was allegedly the mistress of various executives at state-owned enterprises. She later dropped the defamation complaint. State-owned Enterprises Minister Erick Thohir said that he would consider dismissing executives of state-owned enterprises if their female employees have faced sexual harassment.

COVID-19 pandemic

On 14 May 2020, as a result of the COVID-19 pandemic and its impacts on aviation and airlines, Garuda Indonesia furloughed 800 of its staff for at least three months. In June, it laid off 180 contracted pilots. The airline implemented face masks for the crew members in accordance with health regulations to prevent the spread of the disease. On 16 June 2020, after some passengers complained that they could not see the flight attendants' faces, Garuda president director Irfan Setiaputra said the airline was planning to replace face masks with face shields for its cabin crew. Three days later, in response to public criticism over the plan, he said Garuda's flight attendants would not stop using face masks.

Financial trouble

Due to the prolonged pandemic situation, Garuda Indonesia experienced problems in operations, management, and funding. Its debt became arisen and unpaid, and the corporation is currently on the verge of bankruptcy in court, and future closure by the government. In the effort to save the airline, Garuda has cut around 30 percent of its workforce, reducing its staff to 5,400 staffs from 7,861 staff. Garuda claimed that its board of directors and its commissioners have taken a pay cut as well.At the end of 2021, Garuda reported a debt of $9.8 billion to more than 800 creditors, complicating efforts for out-of-court settlement attempts during the COVID-19 pandemic, where Garuda's income dropped by 70 percent. As the future replacement of Garuda Indonesia in case the corporation is deemed beyond saving, the government prepared Pelita Air Service, a cargo airline currently owned by Pertamina, to be the successor of Garuda Indonesia as the new flag carrier of Indonesia.In May 2022, Garuda is scheduled to appear in the court for its attempts to reschedule its debts. Garuda filed for a 30-day delay in the proceedings, which is granted by the court. This is a second extension given by the court, as the original court date is in March 2022.In April 2022, the Sixth Committee of Indonesia's People Representative Council and Erick Thohir, Indonesia's Minister of State Owned Enterprises, decided to execute a scheme to save the ailing airline.In June 2022, during Garuda's attempt to delay payment of its debts, Garuda announced that its debt is $8.3 billion, where its biggest debtors is Airbus SE and Pertamina. If the delay to pay its debts is accepted by its creditors, Garuda promised that it will be profitable in 3 years. Garuda will also seek funding of $1.3 billion through global bonds and issuance of new stocks. On 17 June 2022, Garuda's creditors voted to accept Garuda's debt restructuring, saving the company from bankruptcy. Boeing is not joining the debt restructuring process because Garuda stated that its amount of debt to Boeing is not verified yet, and Garuda stated that if Boeing did not confirm its debt to Boeing in 30 days after the debt restructuring, Garuda's debt to Boeing can be totally removed. On 20 June 2022, Garuda's debt restructuring is put on hold because two of the lessors did not agree with the debt restructuring, and a new court date is set on 27 June 2022.In September 2022, Garuda Indonesia filed for US Chapter 15 bankruptcy protection.

Corruption case

On 22 June 2022, Attorney General's Office of Indonesia stated that it is finishing its investigation of corruption on the purchase of CRJ-1000 and ATR72-600 aircraft which is breaking the law. Setijo Awibowo, the Vice President of Strategic Management, Agus Wahjudo, the Executive Project Manager of Aircraft Delivery and ex-Vice President of Treasury Management Albert Burhan is the suspect in the case. Emirsyah Satar, the CEO during the alleged corruption, has been arrested for another corruption case. The loss for Indonesia is reported to be US$609 million.