Garuda stalls multibillion-dollar deal in ‘buyers market’

Garuda Indonesia is in no hurry to finalise a multibillion-dollar order of as many as 250 aircraft, saying the sluggish global economy will give it more leeway in negotiations with Airbus Group and Boeing. Decisions by other airlines to push back purchases amid tough operating conditions give Garuda more breathing space, President Director Arif Wibowo said Tuesday. The order is part of the flag carrier’s plan to nearly triple its revenue to $10b by 2020. “It’s a buyers’ market right now, so I think we have one or two years to see their response,” said Wibowo, 49. “A number of airlines have decided to reschedule their aircraft deliveries, so we have to be tactical in dealing with these two major suppliers.” Southeast Asian carriers may need to push back delivery of aircraft after a decade of economic growth and optimism about a surge in air travel prompted them to order hundreds of jets, Tony Tyler, CEO of the IATA, said in February. Garuda has bucked that trend, with its share price surging 56% this year after a turnaround in the carrier’s financial results and its inclusion in the MSCI Indonesia Index of mid- to large-cap equities. Garuda has “no appetite” for the A380 superjumbo from Airbus, a plane that would only fit airlines with specific needs, Wibowo said. Wibowo, who’s been president director since December 2014, said Garuda is completely unhedged in terms of its oil needs at the moment and would only start hedging if the jet fuel price rises to 47.7 cents per liter. The Singapore jet fuel price was 30 cents a liter at the end of April.<br/>