Garuda to buy 7 more jets as business grows
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)