GARUDA INDONESIA is renegotiating orders for 24 Airbus Industrie and Boeing aircraft in a move to reduce capital expenditure and prepare for eventual privatisation.

The airline is understood to have reached a tentative agreement with Airbus to convert orders for six Airbus A330s to long-term leases. Financing for the deal is now being finalised, and the first aircraft is expected to be delivered, in the third quarter of 1996.

Garuda originally ordered nine Rolls-Royce Trent 700-powered A330s, as part of an ambitious $4.5 billion fleet-expansion plan launched in 1989. The remaining three aircraft officially remain on the order book, but no specific delivery dates have been agreed.

Garuda is due to begin negotiations shortly, with Boeing on its unfilled orders, for six 747-400s and nine 737-400s. The airline has taken delivery of two 747-400s and seven 737-400s, but has run into trouble raising additional financing for more aircraft.

Garuda placed orders with Boeing before the start of the current downturn and, accordingly, agreed to pay "premium prices", says an industry source. Rather than cancel the aircraft, Garuda is more likely to ask Boeing for price concessions, or a long-term lease arrangement.

A third 747-400 has already been leased from International Lease Finance (ILFC) and the carrier is looking to lease a fourth General Electric CF6-80-powered aircraft.

The Indonesian airline, in the meantime, is threatening to return three of its six McDonnell Douglas MD-11s to GPA, unless, the company agrees to lower its lease rate. Three other tri-jets are leased directly from MDC, and the airline has said that it will replace the GPA aircraft with a further three MDC-leased MD-11s.

Source: Flight International