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Rizal Ramli urges Garuda to cancel Airbus A350 purchase plan
After being on the job for just one day, newly appointed Coordinating Maritime Affairs Minister Rizal Ramli has made the news by requesting national flag carrier Garuda Indonesia cancel its fleet expansion plan
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fter being on the job for just one day, newly appointed Coordinating Maritime Affairs Minister Rizal Ramli has made the news by requesting national flag carrier Garuda Indonesia cancel its fleet expansion plan.
"I made the request to President Jokowi last week. I don't want Garuda to go bankrupt again. Last month it agreed to buy 30 Airbus A350 using a US$44.5 billion loan from the China Aviation Bank. The aircraft is only suitable for the Jakarta-America and Jakarta-Europe routes," said Rizal on Thursday as quoted by kompas.com.
According to Rizal, the international routes planned by the carrier are unprofitable. Airlines in Southeast Asia that offer similar routes, such as Singapore Airlines, have poor financial performance, he pointed out.
Rizal added that Garuda's routes to Europe only had a 30 percent passenger load factor. Instead of expanding its international routes, it would be better if Garuda bought a number of Airbus 320 and focused on domineering the domestic and regional markets.
"We can rule the regional market in five to seven years. When we are strong enough, then we can go onto the next step. The President has agreed to the cancellation of the purchase of the Airbus A350 and we will summon the [Garuda] management to change its plans," said Rizal.
Rizal said he had relations with Garuda Indonesia. During his time as the coordinating economic minister under president Abdurrahman "Gus Dur" Wahid, the airline was unable to repay a $1.8 billion loan with a consortium of European banks.
He said that at the time the consortium had threatened to seize Garuda's fleet. He responded by finally threatening to sue the banks for charging an exorbitant interest rate.
The consortium later offered a peace settlement and agreed to restructure Garuda's debt.
After going through that experience, Rizal said he did not want Garuda to buy the Airbus A350.
Separately, Garuda Indonesia vice president for corporate communication M. Ikhsan Rosan said the carrier had not made a final decision on the purchase of the Airbus A350.
Ikhsan said the carrier was considering whether it would use Airbus A350 or Boeing 787.
"It is true that there was a signing [ceremony] in Paris [with Airbus in June], but it was just a letter of intent," said Ikhsan. (kes)
