Garuda to triple capacity by 2014
Garuda Indonesia Airlines is in Singapore with one of its new Boeing 737-800s to promote plans to expand its capacity threefold by 2014. Dubbed Quantum Leap, the five-year plan begins in earnest this year, as Garuda takes delivery of 23 new B737-800s and a single A330-200.
“We’re planning to add 10 domestic routes this year, increase frequencies on regional services including Singapore and Hong Kong,” said Garuda president and CEO Emirsyah Satar. “These new aircraft will support our expansion plans, which are in line with our strategy to increase the number of domestic departures by over 150 percent, to 2,072 per week, and international departures more than threefold, to 1,222 a week, by 2014.”
Operating from main hubs in Jakarta and Denpasar, the airline now flies 67 airplanes and plans to more than double the fleet to 116 aircraft over the next five years. Along with 737-800s and medium-haul A330-200s and -300s, Garuda plans to introduce 10 Boeing 777-300ERs on new ultra-long-range flights starting in 2011. The airline converted an option for 10 Boeing 787s to its firm order for the 777s, said Satar.
Beginning June 1, the carrier is to start a daily nonstop service from Jakarta to Dubai and on to Amsterdam– the first of a number of planned new European destinations, including Frankfurt, Paris, London and Rome. Garuda initially plans to serve Amsterdam with its fleet of A330-200s. From 2011, it plans to use its new 777-300ERs for the service and the rest of its European destinations.
The airline is now in the process of retrofitting its current fleet of six A330-300s with lie-flat beds in executive class and seatback video-on-demand throughout the aircraft. It expects to complete the process by the middle of this year and fly the newly fitted aircraft on international routes to Japan, Korea and Australia.
Part of the airline’s financing strategy centers on the launch of a planned IPO some time around the middle of this year. Although Satar said he expects the offering to raise $300 million, he noted that he planned to address much of the company’s funding needs through relationships with operating lessors.
The CEO said the airline also plans to enter the low-fare market with a new entity called CityLink, adding that he would likely designate 20 more aircraft for the operation, including some of the airline’s aging 737 Classics now slated for replacement by 737-800s. Garuda would also tap the second-hand aircraft market for either Boeing or Airbus equipment, said Satar. Now in the process of gaining regulatory approval for an eventual spin-off, Garuda would launch CityLink “some time this year,” he promised.
Satar said the airline’s most pressing need centers on “human capital,” notably 120 to 140 pilots per year. Meanwhile, administrative initiatives include efforts to join the SkyTeam alliance with the help of KLM and Korean Air Lines.