Garuda Indonesia
A plane belonging to Garuda Indonesia is seen on the tarmac of Terminal 3, SoekarnoÐHatta International Airport near Jakarta, Indonesia April 28, 2017. Image Credit: Reuters

Garuda Indonesia is in early talks with three different Middle Eastern carriers, Emirates, Etihad Airways and Qatar Airways, about setting up a possible partnership.

The Indonesian flag-carrier is seeking a partner that can offer expertise and connectivity, Deputy State-Owned Enterprises Minister Kartika Wirjoatmodjo said in an interview Wednesday. The airline can afford to take its time thanks to a rebound in air travel that has eased pressure on it to raise funds, he said.

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Emirates airline and Garuda Indonesia had launched a codeshare partnership last year. Etihad also launched codeshare partnership with the airline last November. Garuda Indonesia said at the time that they had codeshare partnerships with more than 23 airline partners. 

No pressure for money

Garuda has left its state capital injection largely untouched and should achieve $150 million in free cash flow this year, he said.

"Initially we thought Garuda would require immediate additional equity," said Wirjoatmodjo. "We don't have pressure to do a rights issue for more money, but more for strategic collaboration."

The airline's shares jumped 9.3 per cent to 106 rupiah as of 11.13 a.m. in Jakarta, set for the steepest gain in two years.

A deal between Garuda and a Middle Eastern airline would bolster the carriers' Hajj pilgrimage flights, already among the Indonesian airline's most profitable operations. Garuda has been seeking foreign partners to help revive its international reach especially to markets like Europe while the airline focuses more on domestic trips.

Garuda is in talks with potential investors to raise $300 million to $400 million via a private placement, State-Owned Enterprises Minister Erick Thohir said earlier this month.