JAKARTA: National flag carrier Garuda Indonesia will need up to US$500 million to support its expansion plans in 2016, its top official has said.
Garuda Indonesia president director M. Arif Wibowo said the money would be used to finance the expansion of its medium-haul routes and its IT-based operation systems next year.
Arif said that out of the $500 million, around $160 million would be allocated for the company’s capital expenditure (capex), whereas the remaining $340 million would be directed toward subsidiaries such as its low-cost carrier unit Citilink, the technical division Garuda Maintenance Facility (GMF) AeroAsia, and the airport services and ground handling unit Gapura Angkasa.
Citilink would receive most of the funds allocated for the subsidiaries, he explained.
“The majority of our capex will be used for aircraft, most of them for pre-delivery payments for new carriers,” he told reporters on Thursday,
“Part of the funds will be used to finance the upgrade of our IT system. We are automatizing our operational systems and strengthening our e-commerce.”
Arif said that the state-owned firm would procure 23 new planes next year, comprising 15 units for Garuda and eight units for Citilink.
He added that the company would focus on medium-haul routes for international flights, dedicating five Airbus-330s and a Boeing-777 for the routes. Medium-haul flights usually take between three to six hours.
By developing medium-haul flights, Arif said that Garuda would mostly focus on developing direct flights from China to Denpasar. Garuda opened a new route connecting Guangzhou to Indonesia’s top tourist destination earlier this month citing high demand from the world’s most populous nation as the reason for doing so.
Chinese visitors grew 14.5 percent yoy in September and, according to the latest data on tourism from the Central Statistics Agency (BPS), China was on top of the list of countries that generated the highest number of tourists to Indonesia during the month of September.
The newly opened Ghuangzou-Denpasar route currently serves three flights a week and in the future, Arif said that Garuda hoped to boost the number of flights from the route in addition to boosting direct flights from Beijing and Shanghai to Denpasar.
Furthermore, Arif said that his company hoped to see more long-haul flights to the Middle East, particularly Medina and Mecca, to meet the high demand from Indonesian Muslims performing the haj and umrah. Indonesia, the world’s fourth most populous country with a predominantly Muslim population, sees 5 million haj pilgrims and 7 million umrah pilgrims annually.
Arif said that how Garuda would source its funding needs for next year would depend on its 2015
full-year financial performance, adding that his company would combine internal and external sources for its capex.
The company booked stagnant revenues of $2.85 billion as of September from last year’s $2.83 billion. However, the company managed to book $50.13 million in net profits during the reported period, in stark contrast to the $222.30 million in losses booked during the same period last year.
Data from the company revealed that Garuda Indonesia transported around 17.69 million passengers during this year’s first nine months, a 13.62 percent increase year-on-year (yoy) from last year, according to a previous report. Of that number, 3.18 million passengers traveled on international routes, a 9.7 percent yoy increase.
