GMF Aero Asia in Final Talks With Overseas Partners for $50m MRO Facility in Batam

Garuda Maintenance Facility Aero Asia plans to establish a new maintenance, repair and operations facility in Batam, Riau Islands, with European and Japanese partners next year. (JG Photo/Afriadi Hikmal)

By : Jakarta Globe | on 1:18 PM December 18, 2017
Category : Business, Corporate News

Jakarta. The aircraft maintenance unit of national flag carrier Garuda Indonesia plans to establish a new maintenance, repair and operations facility at Hang Nadim International Airport in Batam, Riau Islands, with European and Japanese partners next year to secure its market share in the region.

The partners, Air France Industries and KLM Engineering & Maintenance and Mitsui, will chip in a combined $31 million to set up a new joint venture that will work on the $50 million MRO facility project. Garuda Maintenance Facility Aero Asia will provide the remaining funds.

GFM Aero Asia president director Iwan Joeniartomen said recently that the companies are discussing a business plan and the division of responsibilities among them. They are expected to sign an agreement in the first quarter 2018.

"Development will start next year. We cannot wait too long, or that market will be taken over by competitors," Iwan said recently.

The Lion Air Group, owner of Indonesia's largest budget airline, is construction a 29-hectare maintenance facility at the same airport. It will have the capacity to handle up to 50 passenger jets simultaneously.

Iwan said GFM Aero Asia aims to complete construction of its facility in 2019.

GFM Aero Asia only managed to raise Rp 1.1 trillion ($77 million) in fresh capital from the sale of 10 percent of its enlarged ownership stake in an initial public offering – far less than the expected Rp 4 trillion.

The company is now in talks with three strategic partners in Europe and Asia for the sale of another 10 percent to 15 percent stake to raise additional capital, Iwan said.

"We are looking to work with only one company, to avoid any conflicts of interest. It is impossible for a strategic investor to have several partners," he said.

Iwan said he expects to conclude the deal by the end of January. As part of the deal, parent company Garuda Indonesia will relinquish 10 percent of its stake in GMF Aero Asia to the strategic partner.

Investment bank BNP Paribas is advising GMF Aero Asia on the deal.

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