Garuda new 737 plane's higher rent may strain finances further
The struggling Indonesian airline is paying around US$400,000 per month for the 737 Max 8 it has leased from BOC Aviation, according to people familiar with the matter. The state-owned carrier pays on average US$200,000 a month for its existing older Boeing 737-800 fleet, the people said, asking not to be identified discussing details that are private.
BOC Aviation declined to comment. Representatives for Garuda didn't respond to a request for comment.
Garuda, which is now owned by Indonesia's sovereign wealth fund Danantara, reported a full year loss in 2024 for the first time since restructuring nearly US$10 billion of debt in 2022.
While the new Max 8 offers better fuel economy than the older planes, it's not clear whether the savings would be enough to compensate for the higher leasing costs. Outside of the difference in the age of the airframe, the doubling of the lease cost can in large part be attributed to the discounted rental prices that Garuda managed to get from its lessors during those debt restructuring negotiations.
Danantara extended a US$405 million loan to Garuda just days before the airline agreed to lease the additional 737 Max. On Friday, the plane was en-route to Indonesia, according to data from flight tracking website FlightRadar24.
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
Garuda is already having trouble keeping its existing fleet in the air, with about 10 per cent of its planes grounded as recently as May as it struggled to make maintenance payments. Nearly 16 per cent of revenue in 2024 was for maintenance and repairs, the highest ratio among flag carriers globally, data compiled by Bloomberg show.
Garuda could receive US$800 million to US$1.2 billion more from Danantara to assist with payments to maintenance and leasing companies, Bloomberg reported earlier this week, citing people familiar with the matter.
Further pressure on the airline may come as it has to take new aircraft after Indonesian President Prabowo Subianto reached a trade deal with US leader Donald Trump that included the purchase of 50 Boeing aircraft. That could force Garuda to agree to a deal under terms it doesn't necessarily favour and with jets it doesn't actually need.
Trump announced in a social media post on Tuesday that Indonesia will order 50 aircraft, including 'many' of Boeing's larger 777 planes, without disclosing a buyer. Garuda chief executive officer Wamildan Tsani Panjaitan has previously said he's in talks to buy 50 to 75 Boeing aircraft, including 737 Max and 787-9 Dreamliner models. BLOOMBERG
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Straits Times
16 minutes ago
- Straits Times
Trump says Brics ‘will end very quickly' if they ever form in a meaningful way
An attendant stands next to South African, Indian, Russian, Brazilian and Chinese flags during a plenary session of Brics Summit, in Xiamen, China on Sept 4, 2017. WASHINGTON - US President Donald Trump on July 18 repeated his threat to slap a 10 per cent tariff on imports from members of the Brics group of developing nations and said the group would end very quickly if they ever formed in a meaningful way. "When I heard about this group from Brics, six countries, basically, I hit them very, very hard. And if they ever really form in a meaningful way, it will end very quickly," Mr Trump said without naming the countries. "We can never let anyone play games with us." Mr Trump also said he was committed to preserving the dollar's global status as a reserve currency and pledged to never allow the creation of a central bank digital currency in America. Mr Trump announced the new tariff on July 6, saying it would apply to any countries aligning themselves with what he called the "Anti-American policies" of the Brics group. With forums such as the G-7 and G-20 groups of major economies hamstrung by divisions and the disruptive 'America First' approach of the US president, the Brics group is presenting itself as a haven for multilateral diplomacy. Since issuing the threat, Mr Trump has repeatedly claimed without evidence that the group was set up to hurt the United States and the dollar's role as the world's reserve currency. Brics leaders have rejected the claim that the group is anti-American. Top stories Swipe. Select. Stay informed. Singapore Critical infrastructure in S'pore under attack by cyber espionage group: Shanmugam Singapore What is UNC3886, the group that attacked Singapore's critical information infrastructure? Singapore Alleged Kpod peddler filmed trying to flee raid in Bishan charged with 6 offences Asia Indonesia court jails former trade minister for 4½ years in sugar graft case Singapore Singapore police in contact with Indonesian authorities over baby trafficking allegations Singapore NTU upholds zero grade for student accused of using AI in essay; panel found 14 false citations or data Singapore 7-year-old girl, cabby taken to hospital after vehicle pile-up in City Hall area Singapore Former NUH male nurse charged after he allegedly molested man at hospital Brazil in February nixed plans to push for a common currency during its presidency this year, but the group is advancing work on a cross-border payment system known as Brics Pay that would facilitate trade and financial transactions in local currencies. The Brics group expanded in 2024 beyond Brazil, Russia, India, China and South Africa to include members such as Iran and Indonesia. Leaders at the group's summit in Brazil voiced indirect criticism of US military and trade policies. Mr Trump has also taken aim at Brazil specifically, announcing a 50 per cent tariff rate on its imports, starting in August, and launching a separate investigation into what Washington called Brazil's "unfair" trading practices. REUTERS
Straits Times
an hour ago
- Straits Times
US stocks mixed as indexes struggle to retain record highs
Find out what's new on ST website and app. A trader works on the floor of the New York Stock Exchange at the opening bell on July 18, 2025. NEW YORK - Wall Street stocks closed mixed on July 18, with the S&P 500 and Nasdaq struggling to log significant gains as investors awaited further corporate results and remarks by the Federal Reserve chair next week. The Dow Jones Industrial Average slumped by 0.3 per cent to 44,342.19, while the broad-based S&P 500 Index was flat at 6,296.79. The tech-heavy Nasdaq Composite Index crept up 0.1 per cent to 20,895.66. 'Investors are gearing up for next week,' said Peter Cardillo of Spartan Capital Securities, noting that major brands like Coca-Cola, Tesla and Mattel are set to report their earnings. added in a note that 'a lack of major developments has kept the major averages drifting sideways since falling from session highs this morning.' For now, traders shrugged off a Financial Times report on July 18 that US President Donald Trump is pushing for a minimum tariff of 15-20 per cent on European Union products in any deal with the bloc. This would mark a higher level than the 10 per cent added tariff the EU – and most other US trading partners – are facing. Top stories Swipe. Select. Stay informed. Singapore Critical infrastructure in S'pore under attack by cyber espionage group: Shanmugam Singapore What is UNC3886, the group that attacked Singapore's critical information infrastructure? Singapore Alleged Kpod peddler filmed trying to flee raid in Bishan charged with 6 offences Asia Indonesia court jails former trade minister for 4½ years in sugar graft case Singapore Singapore police in contact with Indonesian authorities over baby trafficking allegations Singapore NTU upholds zero grade for student accused of using AI in essay; panel found 14 false citations or data Singapore 7-year-old girl, cabby taken to hospital after vehicle pile-up in City Hall area Singapore Former NUH male nurse charged after he allegedly molested man at hospital Markets also digested the preliminary results of a University of Michigan survey, which found that consumer sentiment crept up to the highest value in five months in July, although still substantially below its historical average. Looking ahead to next week, traders will be eyeing Fed Chair Jerome Powell's remarks on July 22 at a conference in Washington. AFP
Straits Times
an hour ago
- Straits Times
US firms to develop Syria energy masterplan after Trump lifts sanctions
Find out what's new on ST website and app. US President Donald Trump meets with Syrian President Ahmed al-Sharaa in Riyadh, Saudi Arabia, on May 14, 2025. DAMASCUS - US-based firms Baker Hughes, Hunt Energy and Argent LNG will develop a masterplan for Syria's oil, gas and power sector, Argent LNG CEO Jonathan Bass said on July 18, in a partnership aimed at rebuilding energy infrastructure shattered by 14 years of civil war. The move marks a swift turnaround as US companies enter a country previously under one of the world's tightest sanctions regimes that US President Donald Trump lifted at the end of June . The companies plan to help explore and extract oil and gas and produce power to help get the economy running as the government seeks to put Syria back on the map. The plan comes after a dash by other companies, many from Gulf Arab states, to sign deals to bolster Syria's power generation and ports infrastructure. Details of the plan have not been previously reported. 'We are initiating the development of a comprehensive masterplan for energy and power generation in Syria, based on a preliminary assessment of opportunities for near-term improvements in generation capacity and service delivery,' Mr Bass told Reuters via phone. 'Our efforts aim to support the revitalization of the energy sector in coordination with relevant stakeholders,' he added. 'This includes potential activities across the value chain–from exploration and production to electricity generation, including combined-cycle power plants,' he said, declining to elaborate further. Top stories Swipe. Select. Stay informed. Singapore Critical infrastructure in S'pore under attack by cyber espionage group: Shanmugam Singapore What is UNC3886, the group that attacked Singapore's critical information infrastructure? Singapore Alleged Kpod peddler filmed trying to flee raid in Bishan charged with 6 offences Asia Indonesia court jails former trade minister for 4½ years in sugar graft case Singapore Singapore police in contact with Indonesian authorities over baby trafficking allegations Singapore NTU upholds zero grade for student accused of using AI in essay; panel found 14 false citations or data Singapore 7-year-old girl, cabby taken to hospital after vehicle pile-up in City Hall area Singapore Former NUH male nurse charged after he allegedly molested man at hospital Argent LNG, which is developing a liquefied natural gas export facility in Louisiana, in January signed a non-binding agreement to supply Bangladesh up to 5 million metric tonnes of the fuel annually, the first major US LNG supply deal since Mr Trump began his second term. Reuters received no immediate response to emailed questions to global energy services provider Baker Hughes, while Texas-based oil and gas company Hunt Energy declined comment. The plan is to begin with areas west of the Euphrates River, under control of the Syrian government. Syria's east, where much of its oil is produced, remains controlled by the Syrian Democratic Forces, a US-backed and Kurdish-led armed group that Washington has urged to integrate with the new authorities in Damascus following the ouster of former Syrian strongman Bashar al-Assad. After 14 years of war, Syria's electricity sector is severely damaged, generating only 1.6 gigawatts (GW) of electricity, down from 9.5 GW before 2011. Billions of dollars of investment are needed to fix the sector, so the cash-strapped state is looking at private investment or donors to foot the bill. In May, Syria signed a memorandum of understanding with Qatar's UCC Holding to develop US$7 billion (S$9 billion) worth of power generation projects, including four combined-cycle gas turbine power plants and a 1,000-MW solar power plant in southern Syria. 'Growing interest' In a post on LinkedIn on July 17, Syrian Finance Minister Yisr Barnieh said the three US-based companies were forming a coalition to invest in Syria and develop the country's energy sector. 'This visit signals a growing interest among American companies and investors in engaging with Syria,' he said. Mr Bass, Hunt Energy CEO Hunter L. Hunt, and a senior executive at Baker Hughes arrived in Syria on a private jet on the morning of July 16 and were meeting with Mr Barnieh when Israel conducted a series of airstrikes on Damascus that shook the city, Mr Bass said. 'It was big,' said Mr Bass, who has been working on the energy project since visiting Damascus and meeting with Syrian President Ahmed al-Sharaa in April. He was part of both state-led and informal efforts to lobby Mr Trump to meet with Mr Sharaa. The landmark meeting took place in mid-May with a big push from the leaders of Turkey and Saudi Arabia, and Mr Trump announced the end of Syria sanctions. As they are slowly phased out, investor interest in Syria has grown. A week of violence in the southern province of Sweida, however, has darkened the mood in the country and left at least 321 people dead, according to the Syrian Network for Human Rights, a human rights group. 'To work in Syria, there are potholes, there are ditches, it has craters,' said Mr Bass. 'If you don't have the team that's willing to accept craters, don't come.' REUTERS
