Garuda secures deals to lease seven Boeing 737s

JAKARTA (JP): National flag carrier Garuda Indonesia has secured deals to lease seven Boeing 777 aircraft from two American financing companies GE Cash and International Leasing Finance Company (ILFC), the airline's president Abdulgani said here on Thursday.

Abdulgani said one of the seven narrow-bodied Boeing 737s would be delivered next month and the other six would arrive in Indonesia in stages until January next year.

"The aircraft would replace old ones and service new routes to meet growing demand in the domestic and regional flights," he told a media briefing.

Abdulgani said the aircraft would be leased at US$200,000 to $250,000 a month depending on the age and condition of the aircrafts.

The newest aircraft was a 1994-make, while the oldest a 1989- make, he said, adding that the aircraft would be leased for a three-year term.

The procurement of the seven jets was also part of the airline's program to expand its services amidst signs of recovery in the region's aviation business, Abdulgani said, adding that Garuda would reopen direct flights to Seoul, South Korea at the end of the month.

Garuda closed some domestic routes and 17 international ones, including services to the United States, Taipei, Seoul, Paris, Rome, Zurich and Saigon after the financial crisis hit Indonesia late 1997.

Abdulgani said the performance of the national flag carrier has showed an improvement as the result of the restructuring program launched in 1998.

He said that Garuda's load factor, which rose to 68 per cent in 1999 from only 54.4 percent in 1998, continued improving to reach an average of 70 percent. On time performance (OTP) averaged 89 percent in 1999, up from 77 percent in 1998, Abdulgani said.

Abdulgani said that the airline recorded a net profit of Rp 409.6 billion in 1999 after being in the red for more than 10 years.

Garuda's Director of Finance Emirsyah Satar said net profit was projected to increase to Rp 500 billion this year, with the improvement in the airline's operation.

Emir said that the company hoped the airline's debt restructuring could be finalized by the end of this year as talks on the rescheduling of a major part of the debts would be concluded this month.

"The process of restructuring will all be concluded at the end of the year," he said after the media conference.

Garuda's total debts dropped to $1.65 billion in 1999 from $1.8 billion in 1998 after the airline paid part of the debts.

The bulk of the debts included $610 million to the European Credit Agency (ECA), a consortium of credit agencies in France, Britain, and Germany, for the lease of six A330 aircraft, he said.

"The government has agreed to pay about $420 million of the debt," Emir said, adding that talks are underway for restructuring of the airline's debt owed to ECA from 12 years to 16 years. (10)