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Old 27th November 2012, 04:46 PM   #14
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Airline Financing
Indonesia's national carrier Garuda plans to sell bonds to finance expansion
Luc Citrinot - 26 November 2012, 08:48

JAKARTA- A senior official at Garuda Indonesia, the nation's flag carrier, said that the firm seeks to raise at least 200 million U.S. dollars from bond sales next year to finance its expansion plans, local media reported Friday.

Garuda's financial director Handrito Hardjono declared that next year's issuance will comprise dollar- and rupiah-denominated bonds. "With this combination, the amount of foreign-exchange loss can be minimized," Handrito was quoted by the Jakarta Globe as saying.

He did not provide any other terms of the notes, such as the tenor, coupon and investment banks to arrange the debt sale. He said that proceeds from the bond sales should be enough to cover at least half of next year's capital expenditure, with the remaining expenses to be covered by bank loans. "Seventy percent of our capital expenditure next year will be used for planes procurement, while the remaining will be used for working capital," he said, without giving out the total value of the expenditure.

Indonesian companies have been selling bonds to raise funds in the past year, as the country's return to investment grade rating last year has boosted confidence in fixed-income investments.

Garuda has been benefiting from Indonesia's strong economic growth, as rising household incomes and an increase in travel to the country's many islands have made air transportation a profitable industry.

In an attempt to tap into the country's opportunities, Garuda introduced its Quantum Leap program to revitalize its fleet and expand its network. Emirsyah Satar, Garuda's president director, said that the airline sees brighter skies ahead with Indonesia's robust economic performance expected to continue. "We are really capitalizing on the growth of Indonesian economy," he said. He added that the airline expects to receive 24 new aircraft next year and that "2013 will be a challenging year for Garuda."

Garuda currently operates 95 planes and will receive an additional 10 by year-end. Under Quantum Leap, Garuda projects that it will have 144 airplanes by 2015.

Citilink, Garuda's budget airline subsidiary, will operate 50 airplanes by 2015, more than triple from its current fleet of 16.

Garuda also predicts scheduling more than 1,000 flights per day by 2015, more than double from its current 400 daily flights.

Garuda's net income surged 52 percent to 56.48 million U.S. dollars in the January-September period from a year earlier, while its revenue rose 14 percent to 2.39 billion U.S. dollars.

(Source: Xinhua)
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