Garuda to acquire 24 new aircraft

Indonesia’ flag carrier Garuda Indonesia is embarking on a “quantum leap” expansion plan by raising aiming to raise at least $200 million from bond sales next year to purchase 24 aircraft among other efforts, the Jakarta Globe reported.

The carrier currently has 81 aircraft and another 13 under Citilink, the company’s low-cost subsidiary.

Strategy has revolved around an aggressive remodeling plan to rejuvenate the once-sickly state-owned airline since CEO Emirsyah Satar returned to the helm in 2005.

“By 2015, we plan to expand to a fleet of 194 aircraft in a quantum leap. [In addition],144 will be for Garuda and 50 for Citilink,” Emirsyah told Inside Investor in September, 2012.

“Last year, we carried 17.1 million passengers. By 2015, we aspire to carry 29 million with Garuda and 16.4 million with Citilink, which makes 45.4 million in total.”

The airline’s financial director, Handrito Hardjono, told reporters that the issuance next year will be made in both dollar- and rupiah-denominated bonds.

“With this combination, the amount of foreign-exchange loss can be minimised,” said Handrito at the signing ceremony of Garuda’s $120 million syndicated loans.

Handrito said that proceeds from the bonds should be enough to cover half of next year’s expenditures with the remainder being covered by loans.

“Seventy percent of our capital expenditure next year will be used for planes procurement, while the remaining will be used for working capital,” he said, without giving the total value of expenditure.

Garuda has greatly benefited from Indonesia’s economic rise, attributing growth to a burgeoning middle class with new-found wealth curious to seek out new destinations.

Increased connectivity across the archipelago has lead to sanguine predictions, with Emirsyah predicting healthy passenger growth.

“We believe that our domestic capacity will double by 2015,” Emirsyah said, aligning with forecasts to double flights from the currently 400 daily flights to over 1,000 by 2015.