Garuda Plans to Buy 18 Sub-100 Seat Planes to Expand Routes

PT Garuda Indonesia, the flag carrier that raised $530 million in a January initial public offering, may buy 18 planes with fewer than 100 seats to expand services to areas without airports for larger aircraft.

Garuda plans to buy the planes by 2015 with delivery starting next year, Elisa Lumbantoruan, the airline’s finance director, said in Jakarta today. A request for proposals will be issued next month and announcement on the tender is expected in June, he said, without naming prospective suppliers.

“We want to be able to land on shorter runways,” Lumbantoruan said at a press briefing. “We want to fly tourists to regions around Bali.”

Garuda, which today reported net income fell 48 percent in 2010, intends to use the smaller planes to access more domestic routes among Indonesia’s 17,000 islands that span 3,200 miles (5,150 kilometers), the distance from Florida to Alaska. The carrier wants to “bypass” larger airports in Jakarta, Surabaya and Bali’s Denpasar by offering direct flights among smaller regional airports, Lumbantoruan said.

Capital Spending

Garuda, which raised $4.8 trillion rupiah in an initial public offering in January, plans $250 million in capital spending this year, as much as $130 million of which will go to purchasing new planes, Chief Executive Officer Emirsyah Satar said. The company also plans to add routes this year to Taipei and member countries of the Association of Southeast Asian Nations, he said.

The carrier also plans to lease six Airbus 320-200s for its Citilink service this year. The mainline carrier will add two A330-200s and nine Boeing Co. 737-800 NG in the year, Lumbantoruan said.

Garuda has pared flights to Tokyo as concerns about radiation leaks at a tsunami-stricken nuclear-power plant north of the capital and electricity shortages damp travel demand. The carrier will combine two separate services to the Japanese capital from Jakarta and Denpasar into one flight starting April 5 until April 22, Lumbantoruan said.

Garuda dropped 3.6 percent to 530 rupiah as of the 4 p.m. close of Jakarta trading.

Net income fell to 515.5 billion rupiah ($59 million) from 1 trillion rupiah last year as operating costs increased, outstripping a 9 percent gain in revenue to 19.5 trillion rupiah.

Fuel costs will probably rise again this year, Satar said. Source: Bloomberg