Garuda's apparent transformation

I met up recently with the president of Garuda Indonesia to discuss the airline's future plans.

The impression I got was that Garuda appears to have transformed itself. A few year ago Garuda was struggling but now it has new aircraft and is expanding.

I remember at the end of 2005 and early 2006 Garuda received its very first Boeing 737-800s. These were on lease from GATX and it was a significant deal at the time because until then Garuda was only able to source older 737s and aircraft leasing companies were generally reluctant to lease new equipment to the Indonesian carrier. At that time, Garuda was losing money and it was unclear what level of support Indonesia's government was willing to give to the national carrier.

But in 2006 the airline received a cash injection from the government. The carrier in recent times has cut its workforce to 5,200 from 5,800 and last year it made a net profit. Since the global economic downturn aircraft leasing companies appear to be falling over themselves to lease Garuda the 737s and A330s it wants. AerCap, for example, leased Garuda some A330s. Pretty good achievement considering Garuda has had a long-running dispute with the European credit agencies (ECAs) over the financing of some A330s the carrier bought in the 1990s. Garuda's president Emirsyah Satar told me the airline has reached an agreement with the ECAs, that is likely to be signed in mid-October, whereby Garuda will pay some money and extend the loan period. We also discussed the IPO that Garuda plans to have in mid-2010. He says the reason it is doing the IPO is so it no longer has to rely in future on government financial assistance.