Garuda Indonesia earned a profit last year, after suffering losses in 2014. (Antara Photo/Yusran Uccang)

Garuda Indonesia to Spend $1.85b for 24 New Planes


JULY 13, 2015

Jakarta. Garuda Indonesia, the national flag air carrier, will spend as much as $1.85 billion to acquire 24 new planes over the next three years.

The new fleet includes 11 Airbus A330s, nine ATR turboprop planes, three Boeing 777-300s and one 737-Max. The state-controlled carrier has started the purchase this year, ordering up to 15 new aircraft.

I Gusti Ngurah Akshara, director of finance and risk management at Garuda Indonesia, said that the aircraft began arriving in Indonesia starting from June this year and keep coming through December 2017.

About 80 percent of the order will be financed through an operating lease, while the remaining 20 percent will be through a financial lease, according to the director. Still, he pointed out that the scheme may change in the next three year "depending on market condition and internal management."

The new order follows Garuda Indonesia's $20 billion deal with Airbus in Paris last month in which the airline is slated to acquire 30 787-900 Dreamliners aircraft and 30 737-Max jets.

"The initial agreement in Paris is estimated to supply aircraft until 2025. We're still evaluating the next process," the finance director said.

Garuda Indonesia is planning to add nine more units of wide-body aircraft to its fleet — which currently has 22 wide-body aircrafts — in a target to operate as much as 53 units of wide-body aircrafts by 2025, according to the company's president director Arif Wibowo.

Last month Arif was quoted by local media saying the State-Owned Enterprises Minister Rini Soemarno asked the airline to grow its fleet to 450 aircraft in the next five years from its current fleet of 136 aircraft as of the first quarter, according to Reuters.

Improving financial performance

After reversing last year's losses to a $11.4 million net profit in the first three months of the year, Akshara said that the airline's first-half performance is slated to improve on the back of Garuda Indonesia's $62 million efficiency efforts.

"The growth of revenue and net profit for the second quarter of the year is better than the quarter before. Up until June, we've lowered costs by more than 14 percent," he said, adding that Garuda Indonesia aims to trim up to $212 million of cost by year-end.

Akshara also said that Garuda Indonesia's improving financial performance is backed by the positive performance of subsidiaries, such as the aircraft maintenance and facility unit Garuda Maintenance Facility and low-cost unit Citilink.

Garuda Indonesia is aiming for $4.4 billion in revenue this year, up 12 percent from last year's revenue of $3.93 billion.