NEW BUSINESS MODEL GARUDA INDONESIA IMPACT OF PANDEMIC COVID-19 AND LEASE RESTRUCTURING

• Main Author: Mandala Putra, Bobby
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/53217
• Institution: Institut Teknologi Bandung

In 2019 the international world was shaken by the COVID-19 virus. Starting from the case in Wuhan, China, the COVID-19 virus quickly spread worldwide. The COVID-19 virus is easily transmitted, primarily through contact with humans through droplets. The impact of the spread of COVID-19 worldwide has led to travel restrictions by the local Government, causing the transportation industry to suffer heavy losses. As an Indonesian airline, Garuda Indonesia has also been significantly affected by travel restrictions. Consequently, Garuda Indonesia reduced its total production capacity and grounded the aircraft it operated. Garuda Indonesia has also made seat adjustments related to government regulations that require maintaining distance to minimize the spread of the COVID-19 virus. As a result of the COVID-19 Pandemic, Garuda Indonesia suffered significant losses. Garuda Indonesia needs to increase the revenue and restructure the lease cost. The solution that can consider increasing revenue is Garuda Indonesia creating a new business model in carrying out its operations and following the regulation of COVID-19. The future research on this case that can develop is the additional service needs deliver to passengers so that the customer willingness upgrade to economy premium class. Also, Garuda Indonesia creates an End to End Cargo Intercity Solution collaborate with an existing startup company. For restructuring the lease cost in a pandemic situation, Garuda needs to negotiate with a lessor. Besides, in 2020, the Financial Accounting Standards Board issued a new Statement of Financial Accounting Standards (PSAK), which adopted the International Financial Reporting Standard (IFRS) 16, which treats aircraft operating leases that were previously recognized as off-balance-sheet. On applying the new PSAK 73 recognized as on-balance-sheet in the financial statements. As a result of the new PSAK, Garuda Indonesia recorded additional costs that impacted Garuda Indonesia's Financial Statements. Garuda Indonesia can extend the rental lease with decreases the lease rate. This study forecasted the lease cost restructuration using PSAK 73.