Business

Garuda, Sriwijaya ink purchase
deals in Paris

Two Indonesian airlines inked separate deals to purchase dozens of planes from two different aircraft manufacturers at the Paris Air Show.

Flag carrier Garuda Indonesia announced an order for as many as 50 Airbus A320s on Tuesday — a firm order of 25 with an option for another 25 — while on Monday, privately-owned Sriwijaya Air agreed to buy 20 Embraer 190 jets, with purchase rights for 10 more, the Brazilian aircraft maker said in a statement released on Monday.

Emirsyah Satar, Garuda’s president director, signed the Memorandum of Understanding (MoU) on the purchase with Airbus Customer COO John Leahy at the Airbus chalet in Le Bourget just outside Paris, according to a Garuda statement released on Tuesday.

Of the 25 narrow-body jetliners the firm ordered, 15 will be A320 standard while 10 others will be the re-engined A320Neo. The aircraft will join Garuda’s low-cost unit Citilink in 2014, with five aircraft expected to arrive annually until 2018.

Citilink will renew its fleet by operating four leased A320s with 180-seat capacities to serve high-density domestic and regional routes by the end of this year. Citilink currently uses Boeing 737-300/400s.

The firm order is worth about US$2.2 billion at list prices. Airbus prices the A320 standard, which has a maximum range of 3,200 nautical miles (5,900 kilometers), at $85 million, while the re-engined model is $6.2 million more. Airlines, however, usually get discounts when placing large orders.

Emirsyah said the order for 50 A320s was part of development to increase Citilink’s capacity and competitiveness in the growing low-cost flight market.

“The A320 is well-suited to a low-cost airline due to its reliability, comfort and efficiency,” he said in the statement.

Leahy said that the announcement marked a new milestone in good relations between Airbus and Garuda and that the A320 would be able to support Citilink’s future development due to its low operating cost.

While Garuda has operated and ordered a number of Airbus A330-200/300 wide-body airplanes, all of its current narrow-body fleet consist of Boeing 737-300/400/500 series and the Boeing 737-800 NG series. Boeing has the 737-800 NG listed at $80.8 million on its price list.

Garuda stated that the A320 was chosen for Citilink because the airplane has a lower operational cost and price, and it was suitable for operating at high-density airports.

The flag carrier also stated that the A320 delivery schedule was faster, with slot assembly available at Airbus.

The Sriwijaya deal, which is worth $856 million at list prices based on January 2011 economic conditions, could reach $1.28 billion if all purchase rights are exercised, according to an Embraer statement released on Monday.

Embraer Commercial Aviation president Paulo César de Souza e Silva highlighted the transaction’s significance, saying it was an important endorsement of the Embraer 190’s capability for operating in such a diverse geographical environment as Indonesia.

With a range of 2,300 nautical miles, Sriwijaya’s Embraer 190s have 100 seats in an all-economy-class configuration.

Sriwijaya has identified a need for a dedicated fleet of 100-seat aircraft to replace some of its narrow-body aircraft and to achieve its expansion objectives, which include adding frequencies to existing domestic markets and pioneering non-stop services throughout the archipelago.

Sriwijaya CEO Chandra Lie said the airline selected the Embraer 190 to support the its strategy of developing new nonstop markets that were not economically viable with larger aircraft.

“The new aircraft also lets us redeploy our bigger jets elsewhere in the network, where their size is more compatible with the demand,” he said.

Sriwijaya plans to fly the E190s from its hub at the Soekarno-Hatta International Airport just outside Jakarta to regional hubs in Balikpapan, Makassar, Surabaya and Medan.

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