Garuda to buy 7 more jets as business grows

JAKARTA (JP): State-owned flag carrier Garuda Indonesia will buy at least seven more aircraft to meet a surge in demand, its company operation's director said on Monday.

Rudi Hardono said that in line with its fleet expansion the company was also planning to open up new routes, especially those that were closed due to the economic crisis in 1997.

"We're still shopping around. We're looking for a wide-bodied aircraft, but we haven't got any so far because there's none available in the market," he told a media gathering.

He said the company had no specific deadline for the procurement of the new aircraft, all of which would be obtained via a leasing system.

He also fell short of disclosing how much money Garuda had budgeted to buy the aircraft.

Rudi said the firm wanted to replace some of its older aircraft such as the Fokker-28 with new wide-bodied aircraft for long-haul international flights.

Garuda currently operates 42 aircraft: seven Boeing 747s, 19 Boeing 737s, six A330s, five DC-10s and five Fokker-28s.

Prior to the 1997 crisis the company owned 58 planes.

The dramatic fall in demand for airline seats following the 1997 crisis forced Garuda, as well as other local airlines, to cut back on unprofitable flights and trim down fleets in order to cut operational costs.

Garuda closed some domestic routes and 17 international ones, including services to the United States, Taipei, Seoul, Paris, Rome, Zurich and Saigon.

Rudi said the need for more aircraft emerged early this year after an improvement in domestic demand for airline tickets helped boost the company's load factor.

He said Garuda's load factor had increased from an average of 54 percent in 1998 to 68 percent in 1999 and 70 percent this year.

Garuda was in the red for more than 10 years. It only returned to the black last year when it recorded a net profit of Rp 617 billion.

In order to solve the problem, Garuda has been restructuring its financial sector with the help of Deutsche Bank, especially in the handling of its US$1.8 billion outstanding debts. It has been working with Lufthansa to improve its operation and service.

Garuda said the restructuring program had helped it improve its flight performance and services, which it admitted were notoriously bad in previous years.

On time performance has improved from 75 percent in 1997 to 89 percent at preset, well above the industry average of 85 percent.

On the financial side, Garuda has been able to maintain its positive growth by recording a net profit of Rp 29 billion in its first quarter, well above its earlier projection of a net loss of Rp 116 billion.

It booked Rp 300 billion in operating profits in the first semester this year, compared to Rp 405 billion last year.

Garuda expects to book a total of Rp 668 billion profit this year. (cst)