ASEAN KEY DESTINATIONS
Garuda pursuess investors
Its symbol is Garuda, the winged steed of Vishnu in Hindu mythology, but Garuda Indonesia's fortunes more closely resemble the Phoenix, which rose from the flames to fly again.
This, at least, will be the story the flagship air carrier takes to potential investors this week as it touts its IPO in Hong Kong, London and New York.
The scheduled share sale in the first week of February may raise up to Rp 10.3 trillion ($1.1 billion) through the sale of 9.32 billion shares, or 36 percent of its capital, at Rp 750 to Rp 1,100 each.
At that scale, it is likely to be the biggest listing on the Indonesian share market in 2011 and one of the largest in what is expected to be a busy year for underwriters across Asia.
Under the stewardship of former banker Emirsyah Satar, the airline has fixed the safety concerns that saw it and all other Indonesian airlines banned from European skies in 2007.
The ban was lifted in 2009, and Garuda now hopes to cash in on investors' appetite for emerging-market assets to pay off some of its debts and fund an aggressive expansion strategy.
"We will use the funds from the IPO to expand our Garuda fleet, and some of them will be used to expand our subsidiaries," Emirsyah said. "Our domestic passenger growth is promising. Indonesia still has low penetration of airline passengers compared to neighboring countries."
Garuda posted a net profit of more than $100 million in 2009 and was named the world's most improved airline last year by London-based research company Skytrax.
The airline is well-placed to take advantage of Indonesia's booming economy - with growth racing along at around 6 percent last year despite the global downturn - and large population.
Most Indonesians still rely on ferries, buses and motorbikes to traverse the archipelago's 17,000 islands, but as incomes rise they will switch to the convenience and speed of flight.
"With a population of more than 230 million people and a growing GDP, we have ample room for growth," Emirsyah said. "The growth of airline passengers in a country is usually about 1.5 to two times its GDP growth. If the economy grows 6 percent, multiply it by 1.5 to two times, then passenger numbers will grow from 9 to 12 percent."
He said this burgeoning domestic market would help offset hiccups to inbound traveler numbers, such as what occurred after the 2002 Bali bombings or the recent eruption of Mount Merapi.
"When the Bali bombings occurred, the number of inbound passengers declined compared to the years before. But Indonesia's domestic passengers still had high mobility to support us," Emirsyah said.
It should be an easy sell, given the massive inflows of foreign capital into Indonesia's stock and bond markets last year.
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