Garuda to take ATR 72s under operating leases

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Garuda Indonesia says it has not dropped plans to add up to 50 ATR 72-600s to its fleet, although it now plans to change the deal terms to take the turboprops under operating leases.

The Indonesian flag carrier explains that the aircraft will be put on operating leases instead of finance leases, so that the deal will not be listed as "capital expenditure" in its 2013 financial results.

This disclosure comes after a local news report on 26 July quoted the country's minister of state-owned enterprises Dahlan Iskan as saying that Garuda has dropped plans to add the ATRs to its fleet.

Garuda's low-cost arm Citilink has a letter of intent to order 25 ATR 72s, with options for a further 25. Citilink's chief executive Arif Wibowo had previously said that it would base the first five ATR 72s in Batam, and operate a regional hub there.

A source familiar with the discussions, however, tells Flightglobal Pro that Garuda has decided to operate the turboprops, instead of passing them on to Citilink. It is however unclear whether Garuda will set up a new business unit to handle the turboprop operations.

"Citilink is still starting out with its operations, so we'll like to take over them to use it as a feeder for Garuda," says the source. He adds that the first two ATR 72s delivered will be based in Denpasar, and used on routes to Lombok and Kupang.

On its part, Garuda would only confirm that the turboprops will be used on "high yield, low density" routes, and that deliveries for the aircraft will start in 2013.