Garuda Indonesia’s new chief is looking for expansion after years of rationalisation, with much of the growth to be focused on low-cost unit Citilink.
President Emirsyah Satar says that he has ordered a new long-term business plan to be drawn up by year-end covering a network and fleet expansion.
Satar, who was appointed in March when the government also replaced state-owned Garuda’s entire board, adds: “It will cover fleet growth and where Garuda will be positioned, and which markets we will be playing in. We are not in Europe any more, for example. We are also not in the USA. These are potential markets for us to go to.”
Fleet expansion will primarily be for low-cost unit Citilink, says Satar, which Garuda sees as having a solid future within the group. The low-cost airline operates four Boeing 737s on domestic routes, but by the end of the year this should increase to seven, with some aircraft likely to come from Garuda.
“In future Citilink might carry more passengers [domestically] than Garuda because the middle/lower end of the market is the fastest growing,” he says. “It will focus on the middle/lower market and Garuda the middle/upper market. Our effort will be to build Citilink to have a true low-cost carrier function.”
Fleet expansion moves will be discussed with creditors, says Satar, who was involved in a major debt restructuring of the airline several years ago when he was its head of finance. Garuda’s debt, which was around $1.8 billion in 2001, is now $827 million, of which $523 million is owed to European export credit agencies and due by 2010. The debt restructuring mainly covered an extension of the repayment period and the conversion by the Indonesian government of debt into additional equity.
Source: Airline Business
