GARUDA in 1.5 billion USD funding talks

[Pieter C. 5]

Garuda In USD$1.5 Bln Funding Talks

 

June 21, 2010

 

Indonesian flag carrier Garuda is in talks with the US Export-Import Bank for USD$1.5 billion of financing for planned purchases of Boeing aircraft, said Garuda's President Emirsyah Satar on Monday.

 

Satar said Garuda already had a contract with Boeing worth at least USD$1.5 billion to USD$2 billion to purchase 10 777-300ERs and 10 737-800s.

 

"We're looking for a partner to finance the contract," he said. "We're also in talks with several lessors to combine financing for the plan."

 

Satar said that Garuda plans to open new routes to Taipei and Shanghai this year.

 

However, after opening a new route to Amsterdam this month, the firm will delay further expansion into Europe until 2011 due to the euro zone crisis, local newspaper Kontan quoted Satar as saying.

 

Indonesia aims to list the flag carrier in a USD$400 million initial public offering by the end of this year, with the proceeds to be used to buy new aircraft.

 

Garuda has said it plans to add 116 aircraft, comprising 90 Boeing 737-800s, 20 Airbus A330s, and Boeing 777s to its fleet by 2014.

 

(Reuters)

[psidarta 0]

Garuda In USD$1.5 Bln Funding Talks

 

June 21, 2010

 

Indonesian flag carrier Garuda is in talks with the US Export-Import Bank for USD$1.5 billion of financing for planned purchases of Boeing aircraft, said Garuda's President Emirsyah Satar on Monday.

 

Satar said Garuda already had a contract with Boeing worth at least USD$1.5 billion to USD$2 billion to purchase 10 777-300ERs and 10 737-800s.

 

"We're looking for a partner to finance the contract," he said. "We're also in talks with several lessors to combine financing for the plan."

 

Satar said that Garuda plans to open new routes to Taipei and Shanghai this year.

 

However, after opening a new route to Amsterdam this month, the firm will delay further expansion into Europe until 2011 due to the euro zone crisis, local newspaper Kontan quoted Satar as saying.

 

Indonesia aims to list the flag carrier in a USD$400 million initial public offering by the end of this year, with the proceeds to be used to buy new aircraft.

 

Garuda has said it plans to add 116 aircraft, comprising 90 Boeing 737-800s, 20 Airbus A330s, and Boeing 777s to its fleet by 2014.

 

(Reuters)

 

Aircraft procurement processes at GA are now, at least, much more transparent than before. They frequently released news and updates about their financing negotiation, exposing fleet plans to media and how they plan to finance it etc.

Indonesian media is now very critical and whenever there is a press briefing about this state-owned company planning to spend big, questions about how they would finance it will surface first and foremost.

This is a much better reality for GA, which in the past, SUFFERED A LOT from corrupt-government intervention-> some influential 'strong person' trying to push questionable deals for their own sake, forfeiting the airline's business-plan, turning them into a cash-cow for the 'powerfuls'. One could only imagine, 10-20 years a go, before the liberalization of the aviation sector in Indonesia, GA was about the biggest player around, flying almost everywhere, operating a big fleet of brand new planes, selling out their seats at uber high fares. And yet, they LOST so much money and was hopelessly on the brink of bankruptcy. In fact, it was on paper, bankrupt - liabilities bigger than assets.

 

Today, the story is so much more encouraging. The government has placed some spirited young executives at the board of directors running this company, and they are more than happy to announce their future plans (and being realistic with it).

The government no longer interfere with its major decision, well, sometimes they can still come out with unrealistic suggestions like ordering the A380 or opening direct route to south africa, but thanks to the dedicated management team, ideas like this are often very softly quashed. Of course, behind the scene, there may still be hidden agenda, but put it this way, the published numbers were publicly audited, the new planes are visibly gleaming, services are more satisfying and you can almost feel the pride of the crews on duty -> well, they might not be 5 stars yet or anything, but just like coming back from 3 goals down to lead 4-3, they may have a reason for being so.

What I think important is that, at least this airlines does not behave like they are desperately clinging to their star-status... It is an achievement, yes, they are proud of the 4-star recognition, but that's about it - lots of unfinished businesses to be done.

Realizing that they are not the biggest and the best, they've graciously admit that neighboring rivals are bigger and more established. This inspires them to focus on making their realistic ambitions real.

Hopefully, the system they're building now can be implemented to the roots so that when the new management team takes over in due time, it will share the same vision.

 

Just a minor correction on Pieter's article, they do not plan to add 116 planes but they plan to operate 116 by 2014.

Currently they operate 74 (3 B744, 6 A333, 4 A332 (out of 14 planned, with 1 coming in Dec, another one next Feb), 14 older B738, 14 new B738 (out of 50 ordered, with 14 more coming this year) and 33 B733/4/5 (getting rid of 10 B734 by year end).

The first of 10 ordered B77W is scheduled for the second half of 2011 (unless of course they won their bid to wet-lease AI's 3 B77W-which I doubt) while I don't really know how they come out with the eventual number of 90 B738. Could be more orders or more leases to to make that number. However, Mr. Satar had said the aircraft procurement will be a mixed between sale-and-lease-back and direct purchase through the US-EXIM bank.

According to some sources, CGK-TPE to recommence at year end, DPS-BNE-AKL rumoured re-opening first half next year, and a second european city (possibly FRA) in february as another brand new A332 arrives.

Keep progressing like this, and they'll be really good.

 

Cheers!

[jani 0]

Nice write up, psidarta! Very informative. Hopefully MH current management can go through similar thought-process.

[Sing Yew 1]

Garuda In USD$1.5 Bln Funding Talks

 

June 21, 2010

 

Indonesian flag carrier Garuda is in talks with the US Export-Import Bank for USD$1.5 billion of financing for planned purchases of Boeing aircraft, said Garuda's President Emirsyah Satar on Monday.

 

Satar said Garuda already had a contract with Boeing worth at least USD$1.5 billion to USD$2 billion to purchase 10 777-300ERs and 10 737-800s.

 

"We're looking for a partner to finance the contract," he said. "We're also in talks with several lessors to combine financing for the plan."

 

Satar said that Garuda plans to open new routes to Taipei and Shanghai this year.

 

However, after opening a new route to Amsterdam this month, the firm will delay further expansion into Europe until 2011 due to the euro zone crisis, local newspaper Kontan quoted Satar as saying.

 

Indonesia aims to list the flag carrier in a USD$400 million initial public offering by the end of this year, with the proceeds to be used to buy new aircraft.

 

Garuda has said it plans to add 116 aircraft, comprising 90 Boeing 737-800s, 20 Airbus A330s, and Boeing 777s to its fleet by 2014.

 

(Reuters)

 

They are already flying from CGK to PVG. Spotted a GA A330 when I was at PVG last Tuesday.