Garuda Preps Stake Sale for Capex
Indonesia’s flag carrier, Garuda Indonesia, is planning to issue new shares under a non-pre-emptive rights issue scheme this year as it seeks funds to finance its capital expenditure, said Handrito Hardjono, the airline’s finance director.
“A non-pre-emptive rights issue will be executed in either the first or second quarter this year,” Handrito said on Thursday.
The finance director noted the new share offering would be equivalent to 10 percent of the total enlarged capital. He added that Garuda is yet to determine the amount of capital raised from the limited offerings.
The airline also plans to issue dollar-denominated and rupiah-denominated obligations this year, each amounting to $100 million, said Handrito.
“We are still assessing both [debt sale and the rights offering]. We have been intensively conducting internal meetings as well as seriously discussing with officials from the State Enterprise Ministry,” said Handrito, adding Garuda requires a huge amount of capital for its investment needs this year.
Garuda expects the capital raised from the debt sales will be enough to cover 50 percent of its capital expenditure, while the remaining will be sourced from bank loans, Handrito said.
“We have allocated 70 percent of our capital expenditure for aircraft procurement and 30 percent for working capital.”
Garuda has set its capex at $100 million and expects to receive the deliveries of 24 new aircraft, valued at $2.25 billion, this year. The airline currently operates 95 aircraft and plans to expand its fleet to 144 aircraft by 2015 when the Asean open-sky policy will be implemented.
Citilink, Garuda’s budget airline subsidiary, will operate 50 airplanes by 2015, more than triple its current fleet of 16. The subsidiary recently placed an order for 25 Airbus planes.
This plan, called the Quantum Leap program by Garuda’s management, aims to rejuvenate its fleet as well as expand its network.
Garuda also predicts scheduling more than 1,000 flights per day by 2015, more than double its current 400 daily flights.
The carriers net income surged 52 percent to $56.48 million in the January-September period from a year earlier, while its revenue rose 14 percent to $2.39 billion.
Garuda shares dropped 1.52 percent to Rp 650 on Friday.