Garuda Signed $2.5 billion Deal of Airbus

Publicly-listed national flag carrier Garuda Indonesia signed a purchase contract on Wednesday for 11 A330-300 planes worth US$2.54 billion from the British airline manufacturer Airbus.

The deal was signed by Garuda Indonesia president director Emirsyah Satar and Airbus program vice president Tom William, witnessed by President Susilo Bambang Yudhoyono and visiting UK Prime Minister David Cameron at the State Palace on the sidelines of the latter’s visit to Indonesia.

Emir said the purchase of the new planes was in line with the company’s strategy to expand its capacity and add more middle- and long-distance flight routes.

“Garuda aims to operate 194 planes in 2015, comprising B737-800NG, A330-300/200, B777-300ER and A320, with the average plane age of five years,” he told reporters after the signing at the State Palace in Jakarta.

“The 11 planes will be delivered until the fourth quarter of 2017. This is our third order. In November this year, the first plane will have arrived,” he continued.

Emir revealed Airbus planes would be used for flight in the region of Asia and Australia. Several countries, which will become destinations, were Australia, China, Japan, Korea and New Zealand.

“We have chosen Airbus because planes made by the company are the best for regional flights with duration of between eight and nine hours. The plane’s body is also quite wide, it’s suitable for the specifications we need,” he explained.

For the financing, Emir revealed that a third of the funds required would come from Garuda’s internal budget, while the remainder would be financed by leasers or banks. However, he declined to disclose the names of the leasers.

Of the contract signing, William said it was the continuation of his company’s good relationship with Garuda.

“We express our highest appreciation for achievements made by Garuda, particularly in the financial, operational and customer service sides. We’re very proud to be part of Garuda’s development,” he said.

Earlier, Garuda had signed two memorandums of understandings with Airbus for the purchase of 10 A330-200 planes in 2010 and 50 A320 planes for Citilink (Garuda’s subsidiary which handles low-cost flights) in 2011.

In 2012, the company will receive 21 new planes, comprising four B737-800NG, two A330-200, 10 A320 and five Sub-Bombardier CRJ1000 NextGen. From the 21 planes, Garuda received a B737-800NG and an A330-200 in February.

With the presence of those plans, in 2012, Garuda will have 105 planes with the age average of 5.8 years.

Garuda has also announced that to increase its penetration in the international market, the carrier will open a Denpasar (Bali) – Haneda (Tokyo) route on April 27 and a Jakarta – Taipei route on May 24.

Cameron came to Indonesia in a bid to strengthen bilateral cooperation between the two countries, particularly in trade and investment.

President Yudhoyono hoped Indonesia and the UK could continuously boost trade value. He reported that last year, the value had jumped to $2.8 billion from $2.6 billion in 2010.

“The UK is the fifth largest investor in Indonesia, and we aim to find more opportunities to increase investments between the two countries. We also encourage Indonesian businessmen to invest in the UK,” he said.