Trump's trade deal pushes Garuda to learn to love 737 Max again
Trump announced in a social media post on Tuesday (Jul 15) that Indonesia will order 50 aircraft, including 'many' of Boeing's larger 777 planes. While Trump did not disclose a buyer, Garuda chief executive officer Wamildan Tsani Panjaitan had previously said he's in talks to buy 50 to 75 Boeing aircraft, including 737 Max and 787-9 Dreamliner models.
The accord points to the intertwined political and economic interests whenever Trump negotiates with foreign leaders. The US President has previously announced aircraft purchases while visiting countries including Qatar, or when he's hammered out trade agreements with the likes of Vietnam or the UK. In Indonesia's case, Trump said he got the deal over the line in direct negotiations with President Prabowo Subianto during a phone call.
The dilemma for Boeing is how to restore or expand the existing 49-jet Max order without leaving Garuda in a financial and strategic bind. The airline is already having trouble keeping its existing fleet airworthy, with at least 15 jets grounded as recently as May, as it struggles to make maintenance payments.
At the same time, the state-owned carrier, alongside the Danantara sovereign wealth fund that owns Garuda, is under pressure to move quickly with an announcement to please Trump, according to people familiar with the discussions. The airline and Boeing do not yet have an agreement on the models and quantities that would typically be in such an announcement, said the sources, who asked not to be identified discussing private matters.
Boeing referred any questions to Garuda. The airline and its owner did not immediately respond to requests for comment.
A NEWSLETTER FOR YOU
Friday, 8.30 am Asean Business
Business insights centering on South-east Asia's fast-growing economies.
Sign Up
Sign Up
On its own, Garuda does not even have the funds to finance the earlier 737 Max agreement, the sources said. That may prompt Danantara to step in by providing some sort of guarantee or a shareholder loan similar to the US$405 million it put forward last month, the sources said.
Garuda may receive between US$800 million and US$1.2 billion more from Danantara to assist with payments to maintenance and leasing companies, they added.
As a result, any plane deal could be structured as a purchase while the parties discuss financing options with Danantara and lessors for a later stage, the sources said. But given the weighty political implications, Garuda may feel pressure to agree to a deal under terms it does not necessarily favour and with jets it does not actually need, one of the sources said.
Trump is known to combine state visits with tariff announcements to flex his deal-making skills. During his tour of the Middle East, he announced an aircraft accord in every country he visited, including a record plane purchase by Qatar Airways.
Not all of those transactions are necessarily what they appear to be. Trump has previously announced inaccurate sizes for accords, wrong numbers of purchased jets or has mixed up aircraft types. He's also presented old agreements as new ones. Some deals that were announced during his first term meanwhile, have since fallen through.
At this point, Garuda only operates eight older 777-300 aircraft, raising the question of why the airline would want to buy Boeing's yet-to-be-certified successor in large quantities, as Trump has suggested. The earlier 737 Max order still sits on Boeing's books under a special US accounting category for at-risk deals that are not likely to materialise, the sources said.
The state-owned carrier sank back into the red in 2024 after an almost US$10 billion debt restructuring failed to revive its fortunes. That performance is in contrast to its peers in the region that are profitable as they benefit from a rebound in travel demand after the pandemic. BLOOMBERG
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Straits Times
20 minutes ago
- Straits Times
Tipsy Collective sues former directors, HR head; alleges $14m lost from misconduct, poor decisions
Find out what's new on ST website and app. This new lawsuit follows an earlier court battle reported by ST in September 2024. SINGAPORE – The legal battle over control of home-grown hospitality group Tipsy Collective has taken another turn. The company – now led by its majority shareholders, who gained control after a boardroom shake-up in 2024 – has filed a lawsuit against its former leadership, seeking to recover more than $14 million in losses and damages from a string of alleged wrongful payments, mismanagement and unauthorised deletions of company records. In its statement of claim filed on June 12, the plaintiffs – Tipsy Collective and three of its subsidiaries (Tipsy Bird, Social Room Concepts and Tipsy Collective Singapore) – are alleging breaches of fiduciary and contractual duties by three former directors, David Gan Jia Liang, Derek Ong and Reuben Low Kok Cherng, and former human resources manager Avril Lim Qian Jun. Mr Gan, who was the former chief executive of the group, founded Tipsy Collective with Mr Ong in 2019. Following internal disputes, the bloc of investors and shareholders who oppose Mr Gan has increased its collective stake from 59.39 per cent to 97.3 per cent, according to the latest shareholder records from the Accounting and Corporate Regulatory Authority. Mr Gan currently owns 1.66 per cent of the company's shares, and Mr Low holds 1.03 per cent. As Mr Ong died in August 2023, his wife, Ms Melody Huang Bao'er, who is the administrator of his estate, was named as the second defendant in the lawsuit. Top stories Swipe. Select. Stay informed. Singapore SMRT to pay lower fine of $2.4m for EWL disruption; must invest at least $600k to boost reliability Singapore MRT service changes needed to modify 3 East-West Line stations on Changi Airport stretch: LTA Asia Live: Thailand-Cambodia border clashes continue for second day Singapore Etomidate found in blood of 2 people involved in fatal Punggol Road accident in May: HSA Singapore More students to get Smart Buddy watches; most schools to go cashless by end-2025 Singapore Vape disposal bins at 23 CCs for users to surrender e-vaporisers, without facing penalties Business Microsoft Singapore managing director Lee Hui Li dies while on sabbatical Singapore Kopi, care and conversation: How this 20-year-old helps improve the well-being of the elderly This new lawsuit follows an earlier court battle reported by The Straits Times in September 2024 , in which Mr Gan had sued eight parties – including investors and shareholders – claiming they had breached a shareholders' agreement and tried to unlawfully seize control of the company. The defendants – Indonesian investors Reino Ramaputra Barack and Santosa Kadiman, Singaporean Rudy Hartono Widjaja and four shareholder entities – rejected Mr Gan's claims. Instead, they pointed to alleged financial mismanagement under his leadership. They cited mounting debts and lack of financial transparency, and questioned the $6 million spent developing Tipsy Unicorn beach club in Sentosa. They claimed Mr Gan had caused the company to take out $8.7 million in loans, of which $6 million remained outstanding, and that the company owed $5.2 million to suppliers and nearly $1 million to Sentosa Development Corporation. Mr Gan failed to get an interim injunction to retain control of the company's board and subsequently lost his lawsuit against the investors and shareholders. On Nov 6, 2024, the board terminated his role as chief executive and removed Mr Low as director. On the same day, Mr Barack was appointed the chairman of the board of directors of Tipsy Collective. Mr Gan resigned from the board on Nov 15, 2024, while Ms Lim's last day with the company was Nov 17 of the same year. By December 2024, the financial toll of the leadership struggle had affected ground operations. More than 100 employees had faced delays in salary payments since October 2024. The company managed to settle overdue Central Provident Fund contributions and salaries only after four shareholders injected emergency funding. The group, which once operated 13 outlets, has since scaled down. At least four outlets have been shut since October 2024, and it is now left with five outlets. Now, led by its new management, Tipsy Collective is turning the tables on its former leadership with this latest suit. The first set of allegations involves unauthorised payments made. The plaintiffs allege that Mr Gan and Mr Ong caused the companies to transfer more than $4.2 million to themselves and Mr Low, or between entities, without justification. These included $1.49 million in payments, made in December 2020, and $2.8 million disbursed between June 2020 and May 2024. The suit alleged that the payments had no commercial justification and brought no benefit to the companies, and that the three former directors failed to recover the funds, causing significant losses to the group. The lawsuit also cited a string of poor business decisions that allegedly harmed the group financially. The development of Tipsy Unicorn – a 19,000 sq ft beach club on Sentosa's Siloso Beach that opened in September 2023 – is at the centre of these claims. The construction cost of the project ballooned from $4 million to more than $6.1 million due to lack of due diligence and planning. Court documents also noted that the claimants did not have sufficient resources to undertake the construction of Tipsy Unicorn. Despite the fact that Tipsy Collective was 'in financial difficulties and needed monies from shareholders to sustain its operations', Mr Gan and Mr Ong allegedly continued to undertake more projects, the court documents noted. Another alleged mishap flagged in court documents was the group's investment in Tipsy Flamingo Malaysia. The plaintiffs claimed the venture led to a loss of more than $1.3 million. The renewal of leases for underperforming outlets, such as Tipsy Penguin, Tipsy Bunny and Tipsy Flamingo, was also highlighted. These new leases apparently involved higher rents and service charges, further straining the group's finances. The lawsuit further accused Mr Gan and Ms Lim of destroying and withholding company records. Mr Gan allegedly deleted more than 4,000 files from the company's Google Drive and continued accessing company systems without authorisation after his departure. Ms Lim is alleged to have erased nearly 5,000 files and formatted her company-issued laptop, erasing all stored data. Both of them are being held liable for damages linked to the data loss, with the plaintiffs also seeking an injunction to prevent Mr Gan from using any confidential company information that may have been retained. Separately, the Ministry of Law's website showed Mr Gan was declared a bankrupt on June 19, in proceedings separate from the civil suit.
Business Times
3 hours ago
- Business Times
Tech firms to showcase AI innovations in a China under US sanctions
[SHANGHAI] Tech firms huge and small will converge in Shanghai this weekend to showcase their artificial intelligence innovations and support China's booming AI sector as it faces US sanctions. Chinese companies from heavy hitters Huawei and Alibaba to ambitious startups will dominate the two-day World AI Conference, but Western names like Tesla, Alphabet and Amazon will also participate. Chinese Premier Li Qiang will address the opening of the conference, highlighting the sector's importance to the leaders of the world's second-largest economy. Beijing has made AI and self-sufficiency in other cutting-edge technologies a pillar of its national development plan, saying it aims to make China the global leader in AI by 2030. These ambitions have set China on a collision course with the US as the superpowers compete for technological dominance. President Donald Trump's administration has imposed export restrictions on advanced technology to China, including AI chips and chipmaking equipment, citing concerns that it could enhance Beijing's military capabilities. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Still, China has continued making AI breakthroughs that have drawn close scrutiny from US officials. Chinese AI startup DeepSeek unsettled the global AI industry this year with a low-cost model that rivals the performance of leading US systems from companies like OpenAI - but was developed at a fraction of the cost. Jensen Huang, CEO of AI chip titan Nvidia, described AI models from Chinese firms DeepSeek, Alibaba and Tencent as 'world class' during a visit to Beijing this month. More than 800 companies are set to participate in this year's AI forum, showcasing over 3,000 high-tech products, 40 large language models, 50 AI-powered devices and 60 intelligent robots, organisers say. In addition to the industry behemoths, the show will feature startups such as humanoid robot maker Unitree. REUTERS
CNA
4 hours ago
- CNA
Dollar falls against yen as markets weigh new trade deal, Japanese politics
LONDON/NEW YORK :The U.S. dollar strengthened against the Swiss franc and euro but weakened versus the yen on Wednesday as positive sentiment from a new U.S. trade deal was offset by political uncertainty surrounding Japanese Prime Minister Shigeru Ishiba's future. President Donald Trump announced a trade deal on Tuesday with Japan, which lowers tariffs on auto imports to 15 per cent in exchange for a $550 billion package of U.S.-bound investment and loans. It is the most significant of a clutch of agreements that Trump has bagged since unveiling sweeping global levies in April. The dollar gained against the Swiss franc, on track to snap three straight sessions of losses. It was last up 0.24 per cent to 0.79425. Wall Street's main indexes were all advancing while U.S. Treasury yields rose. The greenback weakened against the yen, hitting its lowest level since July 11 at 146.20 per dollar after reports that Ishiba intends to step down next month following a bruising upper house election defeat. Ishiba denied the reports that he had decided to resign, calling them "completely unfounded." The yen was last down 0.06 per cent at 146.565 yen. "The main thing driving USD/JPY has to do with political anxiety as it looks like the prime minister is feeling some pressure to consider resigning," Juan Perez, senior director of trading at Monex USA in Washington, told Reuters in a statement. "This deal helps automakers, for now, but leaves markets also wondering if at any point tariffs can be increased since they will not go away as tools for negotiating anything and everything. Japan, an advanced economy agreeing to new terms for trade does leave concern that successful tariff use will give incentive to keep using their threat." The European Union and the U.S. are heading towards a trade deal that would result in a broad tariff of 15 per cent on EU goods imported into the U.S., two diplomats told Reuters. The deal would mirror a similar agreement the U.S. struck with Japan. The euro pared earlier losses and was up 0.08 per cent against the dollar at $1.176250,. The U.S. dollar has been one of the biggest losers among major currencies since Trump announced sweeping tariffs on trading partners on April 2. The weakness continued as those duties were suspended to allow further negotiations, but has steadied this month. The August 1 deadline for tariff deals still looms for many countries and investors remain cautious on how it will play out. The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.14 per cent to 97.33, on track for four straight sessions of losses. "I think what the market is expecting is that there will be a blanket tariff of a certain amount: let's just say 10 per cent or so, and that has been set in place for quite a while. And I believe that it's discounted," said Jeff Young, head of investment strategy, at PGIM Quantitative Solutions in New Jersey. "The effect on the dollar is going to be ... folded into the overall macro picture. And I think it's going to be difficult to disentangle the exact impact of the tariff versus all the other things that are affecting the currency because I do think that a lot of that is pretty much already discounted." Sterling was up 0.26 per cent at $1.35690. The Aussie hit an eight-month high and was last up 0.4 per cent at U.S.$0.6584. Currency bid prices at 23 July 05:27 p.m. GMT Descript RIC Last U.S. Pct YTD High Low ion Close Chang Pct Bid Bid Previous e Session Dollar 97.272 97.462 -0.18 -10.34 97.612 97. index per cent per cent 272 Euro/Dol 1.1763 1.1755 0.06 per cent 13.61 per cent $1.176 $1. lar 5 171 1 Dollar/Y 146.48 146.645 -0.08 -6.88 per cent 147.21 146 en per cent 5 .15 Euro/Yen 172.36 172.33 0.02 per cent 5.6 per cent 172.74 171 .38 Dollar/S 0.7938 0.7924 0.22 per cent -12.5 per cent 0.7949 0.7 wiss 913 Sterling 1.3567 1.3534 0.26 per cent 8.49 per cent $1.357 $1. /Dollar 7 351 7 Dollar/C 1.3612 1.3605 0.07 per cent -5.32 per cent 1.3628 1.3 anadian 576 Aussie/D 0.6587 0.6556 0.48 per cent 6.45 per cent $0.660 $0. ollar 1 655 1 Euro/Swi 0.9338 0.931 0.3 per cent -0.62 per cent 0.9339 0.9 ss 294 Euro/Ste 0.8667 0.8683 -0.18 4.76 per cent 0.8687 0.8 rling per cent 648 NZ 0.6035 0.6003 0.52 per cent 7.84 per cent $0.604 0.5 Dollar/D 7 997 ollar Dollar/N 10.1092 10.067 0.42 per cent -11.06 10.127 10. orway per cent 053 5 Euro/Nor 11.8906 11.8338 0.48 per cent 1.03 per cent 11.897 11. way 803 Dollar/S 9.509 9.5065 0.03 per cent -13.69 9.5357 9.4 weden per cent 766 Euro/Swe 11.1863 11.1749 0.1 per cent -2.45 per cent 11.196 11. den 5 129
