News Backgrounder
A study in contrasts
Indonesia’s flag carrier, Garuda Indonesia, is growing in leaps and bounds, but the country’s domestic airline, Merpati Nusantara, is mired in debt and continuing losses. Speculation the two may be merged has, for now, been laid to rest.
July 1st 2012
Garuda Indonesia president and chief executive, Emirsyah Satar, has plenty of sympathy for his recently appointed counterpart at government-owned Merpati Nusantara, Rudy Setyopurnomo, who has been set the task of trying to turn around the troubled domestic operation. But sympathy is as far as it goes. Read More »
 |
| Garuda Indonesia: seriously considering buying turboprop aircraft – ATRs or Bombardier Q400s |
That was the message from Satar, speaking on the sidelines of the International Air Transport Association (IATA) annual meeting in Beijing last month. He was commenting on reports the government may want to see the two carriers brought together.
“We are letting them solve their own issues,” Satar told Orient Aviation. “If it doesn’t make sense, we won’t do it. I have told the government several times: we are a listed company. We just can’t go in there and bail them out. It has to be on a commercial basis.”
Merpati lost $81 million last year and another $38.45 million in the first four months of this year. Some 112 of the carrier’s 124 domestic routes are loss-making and red ink is flowing at the rate of $250,000 a day, according to its government owners.
In contrast, Garuda had a net profit of $88 million in 2011. Although it suffered a small loss of $10.7 million in the first quarter of 2012, traditionally a loss-making period, it is heading for another profitable year.
Satar may have more bad news for Setyopurnomo, who was appointed head of Merpati in May. Garuda is seriously considering buying turboprop aircraft – ATRs or Bombardier Q400s – as domestic feeders, especially from the east of Indonesia, to tap into traffic from the country’s resource rich islands.
This would create more competition for Merpati, which wants to be the main feeder to Garuda’s international services.
 |
| Garuda Indonesia president, Emirsyah Satar: reappointed president for another three years |
As well, two new domestic airlines are to launch flights. Privately-owned budget carrier, Lion Air, is launching a full-service offshoot, Batik Air, with 10 B737-900s in March next year with another new private operator, Pacific Royale Airways, also entering the fray.
Unlike Merpati, Garuda appears to be relishing the competition. The number of passengers on its domestic flights increased 23% during the first quarter of 2012, while its international passenger traffic grew 18%.
Garuda’s low-cost subsidiary, Citilink, saw passenger numbers surge 55% compared with the same quarter last year.
Satar, who was reappointed to lead the airline through to 2015 by shareholders recently, believes Garuda will grow around 20% this year.
The airline is aiming to boost its competitiveness significantly by 2015. It is more than doubling its fleet of 89 aircraft to 194. “In 2013, the number of planes in the Garuda fleet will be 128, by 2014 this figure will have reached 163 and in 2015 the number will be 194 of which 33 will be widebodies,” said Satar.
The carrier has seven B777s on order, 25 A320s, including 10 with the new generation neo engine and 18 Bombardier CRJ 1000 regional jets for domestic operations, along with 18 options. Garuda is also looking at purchasing an A330 freighter.
Most of the A320s will go to Citilink, which will have a fleet of 20 by the end of this year, rising to 50 by 2015.
