Garuda Indonesia has been forced to postpone taking initial deliveries of 17 new Boeing 737-300/500 passenger jets on order, because of continuing problems in raising lease finance.

The Indonesian carrier had been due to take delivery of the first 737 in August, but the aircraft remains parked in Seattle. Boeing is understood to have since completed a second 737 for Garuda, but is having to hold on to the aircraft until the airline can secure financial backing for an operating lease.

Boeing was originally due to deliver a total of nine 737-300/500s to Garuda this year, and a further eight in 1998. The airline ordered five -500s in place of an unfilled purchase for one 747-400, and 12 -300s in place of nine 737-400s.

Boeing could use the Garuda delay to overcome its own production problems by re-allocating the aircraft to other aircraft, but could then be liable to pay Garuda penalty payments.

The US Exim bank has offered to underwrite lease financing for the aircraft, but has demanded a guarantee from the Indonesian Government. The loss-making state-run airline is already heavily in debt, and Jakarta is reluctant to provide Garuda with any further financial assistance ahead of its planned privatisation.

Garuda also faces the challenge of raising finance for three more Airbus A330-300s, due for delivery in 1998, and six 777-200s. It only recently managed to take delivery of its first six Rolls-Royce Trent 700-powered A330s after securing a last-minute lease underwriting from Deutsche Morgan Grenfell.

The 777 deal, which has still to be confirmed with Boeing, is a switch on a further five deferred 747-400 orders. The airline needs to finalise the order and select an engine by 1998 if it is going to meet the first 777's intended delivery date of 2000.

A power-plant decision has again been pushed back because of a 20% drop in the rupiah's value.

Source: Flight International