Garuda Indonesia plays a strategic role in connecting the world’s largest archipelago. Its financial health directly affects tourism, trade, and national connectivity. The airline was among the companies hardest hit by the COVID-19 pandemic, which caused travel demand to collapse while operational costs remained high. Even after travel recovered, the company continued to carry heavy debt and inconsistent profitability. Understanding whether Garuda Indonesia is truly recovering has become critical for assessing the future of Indonesia’s aviation industry.
Financial Data Reveal the Airline’s True Condition
Roy Seleky of Pattimura University analyzed Garuda Indonesia’s published annual financial reports over five years. The evaluation focused on four key indicators widely used to measure corporate financial health:
- Operating cash flow
- Liquidity
- Profitability
- Solvency
This approach allowed Seleky to track trends over time and identify whether improvements in one area were supported by overall financial stability.
The analysis used a quantitative descriptive method, meaning Seleky examined numerical data from official financial statements and compared performance indicators year by year. This method is commonly used by financial analysts, regulators, and investors to evaluate corporate sustainability.
Operating Cash Flow Shows Strong Recovery
One of the most encouraging findings is the significant improvement in Garuda Indonesia’s operating cash flow, which reflects the company’s ability to generate cash from its core business.
Key highlights include:
- Operating cash flow ratio increased sharply from 0.026 in 2020 to 0.499 in 2024
- Operating cash inflows rose dramatically, reaching more than USD 585 million in 2024
- Cash generation capacity improved steadily after the pandemic period
This improvement suggests that Garuda Indonesia’s core operations have become more efficient and are generating more real cash.
Seleky of Pattimura University emphasized that this trend reflects meaningful operational progress. However, he noted that improved cash flow alone is not enough to solve deeper financial problems, particularly long-term debt obligations.
Revenue Recovers, but Profit Remains Unstable
Garuda Indonesia’s revenue has rebounded significantly since the pandemic.
The airline recorded:
- Severe losses of USD 2.47 billion in 2020
- Even larger losses of USD 4.17 billion in 2021
- A dramatic turnaround with net profit of USD 3.74 billion in 2022
- A return to losses again by 2024, despite higher revenue
Revenue reached USD 3.41 billion in 2024, showing strong recovery in passenger demand. However, profit margins remained inconsistent due to high operating costs, restructuring expenses, and financial obligations.
Profitability indicators fluctuated sharply:
- Return on Assets fell as low as negative 58 percent in 2021
- It rose sharply in 2022 but declined again later
- Net Profit Margin followed a similar unstable pattern
These fluctuations show that Garuda Indonesia has not yet achieved sustainable profitability.
Seleky explained that unstable profits reflect ongoing structural challenges, including cost management and debt burden.
Liquidity Is Strong but Not Fully Efficient
The study found that Garuda Indonesia’s liquidity levels are extremely high.
For example:
- Current ratio reached 56.11 in 2023
- Quick ratio reached 46.13 in the same year
In financial terms, ratios above 1 or 2 already indicate strong liquidity. Extremely high ratios can signal inefficiency, meaning the company holds large amounts of idle assets that are not being used productively.
This means Garuda Indonesia has more than enough short-term assets to pay its short-term obligations. However, some of those resources may not be generating optimal returns.
According to Seleky of Pattimura University, better asset management could help improve overall profitability.
Debt Remains the Most Serious Risk
The most critical concern identified in the research is solvency, or the company’s ability to meet long-term obligations.
Garuda Indonesia’s debt ratio remained above 1 throughout the study period. This means total liabilities exceeded total assets.
Key data include:
- Debt ratio peaked at 1.85 in 2021
- It improved to 1.20 by 2024
- However, the company remained in a financially vulnerable position
A debt ratio above 1 indicates that a company relies heavily on borrowed funds and faces higher financial risk.
Seleky warned that long-term financial stability will depend heavily on continued debt restructuring and improved capital management.
Asset Value Declined Significantly
The airline’s total asset value declined sharply during the study period:
- USD 10.78 billion in 2020
- USD 6.61 billion in 2024
This decline reflects restructuring, asset adjustments, and the long-term impact of the pandemic.
Despite this, some financial indicators improved, suggesting partial recovery rather than complete financial stability.
Implications for Investors, Government, and Industry
The findings offer important insights for multiple stakeholders.
For investors, the research highlights both opportunity and risk. Improved cash flow suggests operational recovery, but unstable profits and high debt levels remain serious concerns.
For policymakers, Garuda Indonesia’s financial condition has broader economic implications. As a state-owned enterprise, its stability affects national transportation infrastructure and economic growth.
For the aviation industry, the study provides a real-world example of how airlines recover after a global crisis.
Seleky emphasized that Garuda Indonesia must continue improving efficiency and managing debt carefully to achieve long-term sustainability.
He noted that stronger operating cash flow is an important step forward, but financial restructuring remains essential to ensure the airline’s future stability.
Recovery Is Underway, but Full Stability Is Not Yet Achieved
Overall, the research presents a mixed picture.
Positive developments include:
- Strong recovery in operating cash flow
- Improved revenue after pandemic losses
- Better short-term financial flexibility
However, major challenges remain:
- Unstable profitability
- Heavy debt burden
- Weak solvency position
These findings show that Garuda Indonesia is in a recovery phase, but full financial health has not yet been achieved.
Author Profile
Roy Seleky, SE, M.Si, is a financial management scholar at Pattimura University, Indonesia. His expertise focuses on financial statement analysis, corporate financial performance, and business sustainability. His research examines how financial indicators such as cash flow, profitability, and solvency reflect the long-term health of companies.
Source
DOI: https://doi.org/10.59890/ijmbi.v4i1.315
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