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*Eight engines of recovery.* GIAA is focusing on eight strategic priorities to restore performance, including balance sheet repair through Danantara’s USD405mn debt-to-equity swap and USD1.0bn capital injection, fleet and cost rationalization, margin focused route planning, stronger yield management, refreshed leadership, cultural reset, long term transformation, and strategic alliances.
*Recovery in 2026F on higher flight frequencies, cost discipline & deleveraging.* On the operating side, we expect GIAA to begin recovering earnings in 2026F to 2027F, supported by higher flight frequencies, tighter cost discipline, and balance sheet repair. In 2026F, we expect stronger travel demand, improved route optimization, and higher ticket prices to lift revenue to USD 3.7bn (+13.7% YoY), followed by USD 4.0bn (+10.8% YoY) in 2027F. Supported by cost discipline and deleveraging, earnings are projected to turn positive at USD 3mn in 2026F before rising further to USD 59mn in 2027F. Meanwhile, EBITDAR margin is expected to improve from 25.1% in 2025F to 30.6% in 2026F and 30.8% in 2027F, driven by lower idle aircraft and reduced maintenance costs.
*Danantara: The financial enabler for balance sheet normalization.* In our view, GIAA’s sustainable growth depends on a stronger balance sheet and consistent earnings recovery. Danantara’s USD1.0bn capital injection and USD405mn debt-to-equity conversion should lift 2025F equity to USD214mn, fund key maintenance and repayments, and support a more credible turnaround under new management with tighter capex discipline and a return to positive net profit by 2027F.
*BUY with TP of IDR 130 (75.7% upside) on 2026F EV/EBITDAR of 9.0x.* We initiate coverage on GIAA with BUY and TP of IDR130, implying 75.7% upside, based on 2026F EV/EBITDAR of 9.0x, in line with the industry average and supported by recovery progress and solid margins. Key risks include weaker passenger demand, higher fuel costs, and higher than expected interest expenses.
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