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 Indonesia’s national carrier takes to potential investors this week as it touts its initial public offering (IPO) around Hong Kong, London and New York.
Its scheduled listing on February 11 may raise up to 10.3 trillion rupiah ($1.1 billion) through the sale of 9.32 billion shares, or 36 percent of its capital, at between 750 and 1,100 rupiah each.
At that scale it is likely to be the biggest listing on the Indonesian share market — which soared 46 percent last year — 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 banned, along with every other Indonesian airline, from European skies in 2007.
The ban was lifted in 2009 and Garuda is now hoping to cash in on investors’ appetite for emerging market assets to pay off some of its debts and fund an aggressive expansion strategy including new planes and routes.
“We will use the funds from the IPO to expand our Garuda fleet, and some of them will be used to expand our subsidiaries,” Satar said at the IPO’s launch in Jakarta.
“Our domestic passenger growth is promising. Indonesia still has low penetration of airline passengers compared to our neighboring countries.”
More Indonesians can afford to fly, Satar said, adding that the geography of the Indonesian archipelago means travellers depend on air or sea transport.
Garuda posted a net profit of more than 100 million dollars in 2009 and was named the world’s most improved airline last year by London-based research company Skytrax.
Its last fatal crash was in Yogyakarta in March 2007, when 21 people were killed.
The airline is well-placed to take advantage of Indonesia’s booming economy — with growth racing along at around six 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 quickly 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,” Satar said.
“The growth of airline passengers in a country is usually about 1.5 to two times its GDP growth. If the economy grows six percent, multiply it by 1.5 to two times, then passenger numbers will grow from nine to 12 percent.”
He said this burgeoning domestic market would help offset hiccups to inbound traveller numbers, such as occurred after the 2002 Bali bombings or the recent eruption of Mount Merapi volcano.
“When the Bali bombing occurred, the number of inbound passengers declined compared to the years before. But Indonesia’s domestic passengers still had high mobility to support us,” Satar said.
It should be an easy sell, given the massive inflows of foreign capital into Indonesia share and bond markets last year.
Shares in Krakatau Steel, the country’s biggest steelmaker, were nine times oversubscribed and soared 49 percent within hours of debuting on the market on November 10.
But Garuda’s road to riches has not been without its obstacles. The IPO was initially due to take place last year but was delayed by three months, and there have been reports of last-minute doubts over the correct share price.
In November it was forced to issue a public apology for three days of flight chaos caused by the loss of crew rotation data during a switch to a new operating system at Jakarta airport.
More than 700 passengers were affected by flight delays and cancellations which Satar blamed on someone failing to plug in a cable during the software switch.
Indeed, the press conference to launch the IPO on Wednesday was delayed by several hours without clarification.
On the same day, the model of strong demand for low-cost domestic air travel took a blow when budget Indonesian carrier Mandala was forced to suspend operations and seek urgent talks with creditors.
The share market, meanwhile, has stumbled in the first weeks of 2011 amid concerns over rising inflation, and there are also worries about fuel prices, analysts said.
“The timing isn’t perfect. Garuda should have launched its IPO last year when the market was significantly bullish,” Ciptadana Security analyst Syaiful Adrian told AFP.
But none of this is clipping Satar’s wings as he jets around the world drumming up support.
“In 2010 we received four stars from Skytrax. We hope we can receive five stars in 2013. In the world, only six airlines have obtained five stars,” he said.