Garuda Indonesia confirmed plans to launch an IPO in Jun-2010 (Reuters, 26-Aug-09). Details of the offering, including an underwriter and the percentage of shares are yet to be decided. The carrier plans to raise approximately USD300-400 million from the offering.
Garuda Indonesia plans to launch IPO in Jun-2010
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Indonesia refuses to approve Singapore Airlines and Lufthansa JV, protecting Garuda once again
Indonesia has taken another step backwards from liberalisation with moves that benefit flag carrier Garuda at the expense of Singapore Airlines (SIA). In the latest examples, Indonesia is refusing to approve SIA’s new joint venture with Lufthansa and allow SIA to launch a new fifth freedom route from Jakarta to Sydney.
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.
Garuda Indonesia 2017 outlook: should avoid being dazzled by long haul - instead leverage partners
Garuda Indonesia is planning to double the size of its long haul network in 2017 with new services to Moscow and Los Angeles. Garuda had historically been focused on short and medium haul markets; Amsterdam and London Heathrow are its only current destinations outside Asia Pacific or the Middle East.
Heathrow was launched in Mar-2016 as part of a new international push. For the only time this decade, Garuda pursued faster international than domestic ASK growth in 2016. This trend will continue in 2017 as Garuda continues to expand both its regional and long haul international operations.
Long haul expansion is viewed as strategic, but comes with high costs and big risks. Garuda would be better off shelving plans for Moscow and Los Angeles and focusing on opportunities in Asia – particularly China and India.