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Garuda secures new MRO business at Singapore Airshow, plans India launch
February 26th 2016
GMF AeroAsia, the Garuda Indonesia MRO arm, has won new business from overseas by signing up AFI KLM E&M, SR Technics and Airbus during the 2016 Singapore Airshow last week. Read More »
"GMF needs global partners like AFI KLM M&E to strengthen its positioning in the international market," GMF president, Richard Budihadianto, said on Wednesday. The new deal extends an existing partnership by adding maintenance subcontracts for KLM’s B747-400 fleet to its business.
The partnership with SR Technics is for a five-year, $45 million agreement in which both parties will work together to develop GMF’s MRO capabilities and will collaborate on MRO and joint network initiatives. The new deal follows the signing of a separate five-year contract between SR Technics and GMF, which commits the MROs to working together to provide component support for Garuda Indonesia’s B737 fleet. The flag carrier operates 81 B737-800s, with 50 B737MAX 8s on firm order, plus 30 options.
Additionally, the Garuda MRO has signed a Memorandum of Partnership with Airbus, which covers enhanced maintenance training support to GMF and a joint study of a revitalisation plan for the Garuda Indonesia Airbus fleet.
GMF also landed new contracts with Indonesian carrier, Sriwijaya Air, and Malaysia's Eaglexpress.
Budihadianto said his firm is particularly keen to attract Middle Eastern business because the Gulf is a part of the world with a "small MRO capacity”, despite a large and thriving aviation industry.
GMF operates four hangars on a 972,000 sq. metre at Jakarta’s Soekarno-Hatta Airport and has approximately 70% of Indonesia's local MRO business. GMF booked $300 million in revenues last year. Although this was a fraction of Garuda's total revenues of above $3.81 billion, the figure beat the target of $282 million and is expected to grow 20% in 2016.
Speaking at the Singapore show in mid-February, Garuda Indonesia president, Arif Wibowo, said the group’s passenger business is facing pressure on yields from overcapacity and slow economic growth, The slowdown is forcing the flag carrier to restructure its fleet with fewer premium and more economy seats and defer some aircraft deliveries.
"The markets seem to be in over capacity, not only in domestic but also regional," Wibowo told Reuters. "We are facing a strong tailwind from jet fuel prices and a strong headwind from the economic growth in the region. Domestic growth is below our expectations," he said.
Wibowo said Garuda was in discussions with Airbus and Boeing to convert Letters of Intent for either 30 A350s or B787s, but the process was taking longer than expected.
Garuda last week reported a $76 million net profit for the year ended December 31, 2015, attributed to low oil prices and cost cuts achieved through its Quick Wins restructuring. In the previous year, the Jakarta-based carrier posted a $370 million loss.
Separately, citing Indonesia’s ambassador to India, Businessworld last week reported Garuda aims to launch services this year from Jakarta/Bali to Mumbai. The carrier abandoned such plans last year after its hefty losses.
