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National flag carrier PT Garuda Indonesia will pick underwriters within two weeks for a planned initial public offering of up to $400 million to be launched by the third quarter, its chief executive said on Wednesday.

Emirsyah Satar said Garuda’s IPO would help fund its fleet expansion and was on target to be launched either at the end of the second quarter or early in the third quarter of 2010.

State Enterprises Minister Mustafa Abubakar had said last month the country expects to sell stakes in three state-owned firms, including Garuda, in public offerings this year, after stocks soared nearly 90 percent in 2009.

On the sidelines of the Singapore Airshow, Emirsyah said the Indonesian domestic market was expected to grow 9 percent to 10 percent this year and the airline was increasing capacity with 24 new planes — 23 Boeing 737-800s and one Airbus A330-200, largely to meet domestic demand.

“Indonesia is a growing market. Historically the growth of the domestic market is almost double digits and it will continue to grow,” he said on board a brand new Boeing 737-800.

“The number of passengers is a function of the economic growth of the country,” he said, adding that Garuda posted a 40 percent jump in net profit in 2009, thanks to a strong domestic market and demand for flights to Bali.

Overseas tourist arrivals edged up 1.4 percent to 6.32 million in 2009, data showed on Monday, but the fallout of the global economic crisis meant they spent less in the Southeast Asian country.

Analysts have said Garuda’s IPO would probably be well-received as the carrier is seen to gain from rising domestic demand.

The government estimates economic growth cooled to 4.3 percent in 2009 from 6.1 percent in 2008, but it is expected to pick up to 5.5 percent this year along with a global rebound.

Garuda plans to add 116 aircraft, comprising 90 Boeing 737-800s, 20 A330s, and six Boeing 777s to its fleet by 2014, Emirsyah said. As of end 2009, Garuda had 67 aircraft including three Boeing 747-400s and 10 Airbus A330s. The rest were from the Boeing 737 family, he said.



Reuters