Garuda fails to receive $275 million in govt aid

JAKARTA (JP): The country's flag carrier Garuda Indonesia is not likely to get the Rp 600 billion (US$275 million) it requested from the government to partly repay the cost of purchasing two Boeing 747-400 and seven B737-400 aircraft.

The company's president, Wage Mulyono, told reporters here on Tuesday that the Ministry of Finance has rejected Garuda's request for the aid.

Wage said Garuda's finance director, Jazid Adam, has been assigned to pursue the possibility of a subsidy, Antara news agency reported.

He also said that Garuda needs Rp 1.2 trillion (about $549 million), of which Rp 600 billion will be paid by Garuda itself.

Garuda plans to sell its nine Airbus A300-B4, 11 DC-9 and 12 F-28 aircraft as part of its modernization arrangements. The carrier will then either purchase the 10 A300-600s currently leased by the airline from several foreign companies, or lease several new A330s.

Garuda once proposed a budget of $4 billion to modernize and expand its fleet by purchasing 14 Boeing 737-400s, nine Boeing 747-400s and nine Airbus A330s and leasing 16 Airbus A300-600s, but later dropped the idea when the government set a ceiling of $500 million for its foreign borrowing.

Wage also said that if the government eventually absolutely refuses to provide the funds in any way, "we will lease some of the aircraft".

He said that Garuda will likely review its policy because leasing costs have burdened its finances. "For example, Garuda pays $850,000 a month for the leasing of an A300-600, but the current rate for leasing such an aircraft has declined to $515,000 per month," he said.

Garuda is presently leasing five MD-11s, 10 A-300-600s, eight A-737-300s and one B-747-200 Combi. It's fleet now consists of two Boeing 747-400s, six Boeing 747-200s, one Boeing 747-200 Combi, eight Boeing 737-300s, two Boeing 737-400s, 15 Airbus A300s, six DC-10-30s, six MD-11s and six DC-9-32s. (icn)