National flag carrier Garuda Indonesia is preparing to significantly expand its fleet, aligning with a high-profile trade agreement recently negotiated between President Prabowo Subianto and U.S. President Donald Trump. 

The planned procurement is part of a broader bilateral trade deal that includes Indonesia’s commitment to purchase US$15 billion in US energy products, US$4.5 billion in US agricultural goods, and a fleet of 50 Boeing 777 aircraft a figure now adjusted upward to encompass a mix of wide- and narrow-body planes, including Boeing 737s and 787 Dreamliners.

President Prabowo believes this requirement aligns with the government's efforts to strengthen Garuda Indonesia. "We certainly need to develop Garuda. Garuda is our pride," Prabowo said at Halim Perdanakusuma Air Base in Jakarta on Wednesday, July 16, 2025.

He views the planned purchase of 50 Boeing aircraft as a meeting of two interests, supporting Garuda's fleet expansion and providing a negotiating tool for reciprocal tariff reductions.

Garuda’s Corporate Secretary Group Head, Cahyadi Indrananto, confirmed that discussions with Boeing have been ongoing and regularly communicated to the Indonesian government, particularly the Coordinating Ministry for the Economy, which spearheads tariff negotiations with Washington.

“This agreement is aligned with our long-term strategy to grow our fleet to 120 aircraft and expand our route network to 100 destinations over the next five years,” Cahyadi said as quoted by Katadata, on Thursday, July 17, 2025.

He added that the airline’s procurement strategy includes a diverse mix of aircraft types to accommodate both domestic and international routes.

However, some analysts have raised concerns over the timing and feasibility of such a large-scale procurement. Garuda recorded a net loss of US$75.9 million in Q1 2025, surpassing its losses for the full 2024 fiscal year.

“It’s unlikely the airline is in a financial position to commit to these purchases without significant state support,” Associate Professor Yohanes Sulaiman of Jenderal Achmad Yani University, said as quoted by the Straits Times, on July 16, 2025.

To that end, Garuda has secured Rp6.65 trillion (US$407 million) in financial assistance from Danantara, the government’s newly established sovereign wealth fund, most of which will be directed toward its low-cost subsidiary Citilink Indonesia.

Minister of State-Owned Enterprises, Erick Thohir, said the number has now risen to 79 units. “This is based on a new agreement, not the previous one, which was annulled during the debt restructuring process,” Erick said on July 8, 2025.

Trade-offs

While Indonesia is positioning the aircraft deal as a strategic move to deepen trade ties with the U.S., the broader agreement has sparked debate. Trump claimed the U.S. would now enjoy “full access” to the Indonesian market, while Indonesia will face a 19 percent import tariff on its exports down from a proposed 32 percent yet still significantly higher than some regional peers.

Critics argue that the $15 billion U.S. energy import commitment undermines Indonesia’s energy transition efforts and may place additional strain on fiscal policy.

“This arrangement doesn’t necessarily reflect a balanced, win-win outcome. The long-term costs could outweigh the benefits, especially given Indonesia’s renewable energy ambitions,” Senior fellow at the ISEAS–Yusof Ishak Institute, Siwage Dharma Negara, said.

Indonesia’s total trade with the U.S. reached nearly US$40 billion in 2024, with a trade surplus of around US$18 billion, largely driven by electronics, footwear, palm oil, and seafood exports. But new tariffs and procurement pledges could shift that balance in Washington’s favor.