Garuda Indonesia and Emirates to Align?

(4/9/2006)

According to the Indonesian language Bisnis Indonesia, the national airline Garuda Indonesia is eyeing an alliance with Emirate Airlines.

According to Garuda’s President Director, Emirsyah Satar, Emirates together with several yet-to-be-named European carriers, have expressed at least a preliminary interest in forming a business alliance with the Indonesian carrier or one of its subsidiary business units.

While unprepared to list the names of the "several" European carriers considering a business partnership with Garuda, Emirsyah has previously mentioned the German airline Lufthansa as being among the list of potential partners.

Uncertain Financial Status Continues

Both Deutsche Bank and the Asian Development Bank have indicated their readiness to inject a badly needed US$105 million in short-term funds to keep the Airline operating on the provision that the Indonesian Government will guarantee the Company's massive debt now estimated at US$790 million. Whether or not, however, current laws permit the Government to issue the letters of undertaking needed to guarantee Garuda's debt remains a hotly debated issue within the Presidential Cabinet, where final approval on the guarantee now resides.

Garuda to Fly to Europes?

Emrisyah has also indicated that his airline is now actively studying the feasibility of recommencing fight service between Bali and Europe starting as early as 2007. Because a successful European flight operation requires market access that evaporated with Garuda’s close-down all its European services, local observers suggest that a strategic alliance with a major European airlines must be a top priority to the Indonesian airline's survival and its European expansion plans.