Expansion of Garuda Indonesia

The Expansion of PT Garuda Indonesia Tbk (GIAA) seems never to stop. Now, this government airline targets will add the fleet to 450 units in the next 5 years. This amount almost tripled from the fleet amount owned by Garuda. Now Garuda has 175 fleet units. Menteri Badan Usaha Milik Negara (Minister of State-Owned Enterprises) Rini Soemarno support these ambitious plans.

Expansion of Garuda Indonesia

Now Garuda is The most fleet unit airline in Indonesia. This amount has not been added to 65 plane units on the booking stage. From the number of the plane, the nearest competitor of Garuda’s is Air Asia. Tony Fernandes is the owner of Airasia from Malaysia has 169 plane units. If Garuda can realize the plans to have 450 plane units, it’s will make GIAA can be the 5th largest Airline in the world (from the fleet)

Garuda must invest until $41,25 billion ( 545 Trillion Rupiah ) in the next 5 years to realize that aggressive plans. The problem, Garuda authorized capital until Maret month 2015 just reach $874,23 Million or 2,12% from the total funds needed. While the debt reached 1,28 times from the capital. It means, Garuda just can get an additional loan of $6,88 billion because Garuda has an agreement with one of a creditor to can keep the debt ratio to equity (Debt-Equity Ratio) not more than 10,5 times. And Garuda must keep their interest coverage ratio in level 1 times.
So, it makes the question of whether Garuda Airlines plans to have 450 aircraft economically and finance viable?

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