Indonesia's Government is reviewing plans to establish an independent evaluating committee to monitor and evaluate the realisation of Garuda Indonesia`s plan to raise up to USD350 million through an initial public offering (IPO) in Feb-2011 (ANTARA News/Jakarta Globe, 13-Jan-2011). The carrier commenced a series of investor meetings on 13-Jan-2011 in Singapore to gauge demand for its IPO. Garuda president director Emirsyah Satar said: “We are meeting with 26 institutions in Singapore. So far the response is positive. However, don’t ask about a price range. We did not talk about price but value.”
Government reviewing plans to establish committe to evaluate Garuda IPO
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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.
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.