Delivery of A330s has been pushed back as Garuda prepares to float
Paul Lewis/SINGAPORE
The long-delayed privatisation of flag carrier Garuda Indonesia is now planned for December 1998, according to the country's finance minister Marie Muhammad.
The size of the initial public offering remains unclear, but airline and Indonesian Government officials have routinely talked of selling a 25-30% share. The final figure will depend on how many shares are sold to foreign buyers. The Government is expected to retain a controlling stake of at least 51%.
"We are also seeking strategic partnership alliances with other international airlines," says Marie. Speculation has focused mainly on Lufthansa and KLM, which already have code sharing agreements with Garuda.
Efforts are now focused on a financial and structural shake-up of the airline in preparation for the floatation. Garuda's immediate priority is to reduce its high level of debt. In May, the Government assumed $745 million of the airline's debt, incurred from past aircraft purchases.
Outstanding cash orders with Airbus, Boeing and McDonnell Douglas have been renegotiated in favour of aircraft-lease arrangements. Garuda has traded in orders for 747-400s for smaller 777s and 737s, leased three new MD-11ERs at lower rates and pushed back delivery of its first A330-300 to this month (Flight International, 19-25 June, P14).
The airline has announced plans to slim down its 14,300-strong workforce to 10,000 people within five years. Non-core activities, such as the hotels owned by its catering subsidiary, Aerowista, are also to be sold off.
Source: Flight International
