Indonesia’s capital market regulator, Bapepam-LK, granted permission for Garuda Indonesia to launch its planned IPO scheduled for 11-Feb-2011 (Reuters/Dow Jones/The Jakarta Post/Bloomberg, 12-Jan-2011). State-Owned Enterprises Minister Mustafa Abubakar said his office was still finalising details with Garuda management and Bank Mandiri, which owns a 10.6% stake. Acting finance director Elisa Lumbantoruan said "We need to spend huge investment of about USD1.3 billion over the next five years including to rent and buy airplanes." Approximately 80% will be for aircraft. The carrier has a fleet of 87, which will increase to 153, including the low-cost units, by the end of 2014. Its low-cost unit’s fleet will rise to 25 from six. The carrier expects to raise up to USD1.1 billion in the IPO, selling 9.36 billion shares at a price of IDR750 and IDR1100 each, equivalent to a 36.5% stake. It has appointed Citigroup Inc and UBS AG as the international bookrunners and PT Bahana Securities, PT Danareksa Sekuritas and PT Mandiri Sekuritas as domestic bookrunners.
Garuda finalising IPO plans
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Refusing to allow SIA and Lufthansa to coordinate prices and schedules in the Indonesia-Europe market may not have a significant impact on the overall SIA-Lufthansa JV. However, it is an unfortunate move by Indonesian authorities to protect Garuda ahead of the airline's potential launch of services to Germany.
Preventing or delaying SIA from launching Jakarta-Sydney has a bigger short term impact as it leaves in place – at least for now – the Garuda and Qantas duopoly in a growing market. SIA has also been temporarily stripped of 19 weekly slot pairs at Jakarta Soekarno-Hatta International Airport, in another related and seemingly protectionist move.
Southeast Asia aviation outlook: passenger growth accelerates, led by Vietnam, Myanmar and Malaysia
Southeast Asia’s aviation market recorded healthy growth in 2016, with passenger traffic expanding faster than the global average across nearly every country in the region. Six of Southeast Asia’s 10 countries had growth in or near the double digits, led by Vietnam and Myanmar. Seven countries had growth equal to, or higher than, in 2015.
Southeast Asia should continue to experience rapid growth in 2017 and beyond. Vietnam and Myanmar will likely again lead the pack in 2017, joined by Malaysia. The Philippines should experience growth of approximately 10% for the third consecutive year, also putting it towards the top of the pack.
However, overcapacity remains a long term concern, pressuring yields and profitability. The average profit margin of the Southeast Asian airline sector significantly lagged the global average in 2016, and this trend will likely continue in 2017.