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Garuda Seeking $2b Loan To Finance Fleet Expansion
Faisal Maliki Baskoro | June 22, 2010

In this file photo, two PT Garuda Indonesia Boeing 737-400 airplanes outside Soekarno Hatta International Airport. Garuda is hoping to expand its fleet using funds from its initial public offering. (Antara Photo/Ismar Patrizki) In this file photo, two PT Garuda Indonesia Boeing 737-400 airplanes outside Soekarno Hatta International Airport. Garuda is hoping to expand its fleet using funds from its initial public offering. (Antara Photo/Ismar Patrizki)
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Singaperbangsa
2:37am Jun 22, 2010

From a very narrow, selfish point of view, I am just happy to hear that we will finally have a direct flight from Paris to Jakarta starting next year. For years now, we have been dependent upon third parties' airlines to travel from Paris to Jakarta!

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Flagship carrier PT Garuda Indonesia on Monday said it was in talks with Export-Import Bank of the United States for a loan worth up to $2 billion to be used to expand its fleet.

Garuda president director Emirsyah Satar said the company had submitted a loan proposal and was in talks with the bank for a loan ranging from $1.5 billion to $2 billion, with the money to be spent to lease 10 Boeing 777s and 10 Boeing 737-380s.

Garuda is undergoing a major expansion of its fleet, with plans to increase the number of planes to 103 by 2013, up from 67 at the end of last year.

The company had said it would also use proceeds from its initial public offering, scheduled for this year, to finance its expansion. It expects to raise up to $400 million from the IPO.

The carrier expects to add 25 Boeing 737-800s, 10 Boeing 777s and one Airbus A330-200 by the end of next year, Emirsyah said. The financing had been arranged for 15 of the Boeing 737s this year, he said.

“Each month, we’re seeing one or two new planes coming to our hangar.”

Garuda has spent most of the year restructuring debt. In January, it reached an agreement with debt-holders to restructure international and local-currency debt, including buying back $138 million in debt, to clean up its balance sheet ahead of its IPO.

Last week, Minister of State-Owned Enterprises Mustafa Abubakar said Garuda had reached an agreement to extend the maturity of $241.2 million of debt to the European Credit Agency.

The carrier posted a Rp 1 trillion ($111 million) profit in 2009.

Garuda corporate secretary Pudjobroto did not return messages seeking comment on how the additional debt load from the Ex-Im Bank loan would affect the carrier.

Garuda finance director Eddy Porwanto could not be reached for comment.

Emirsyah also announced the opening at the end of the year of a new route to Taipei, and said the carrier would also increase the number of flights to Shanghai and Beijing.

A new Jakarta-Tokyo route will begin on Sept. 1, he added.

Garuda resumed travel to Europe this month, starting with Amsterdam, after a six-year absence due to losses and a European ban on all Indonesian airlines in 2007.

The company is also looking to open routes to London, Frankfurt, Paris and Rome as early as next year.