Indonesia buys Airbus jets as UK seeks investment

JAKARTA Wed Apr 11, 2012 8:59am EDT

1 of 2. Britain's Prime Minister David Cameron (C) walks with the CEO of Garuda Indonesia Emirsyah Satar (L) at Halim Perdana Kusuma airport in Jakarta April 11, 2012. Cameron is in Indonesia as part of his tour to Japan and Southeast Asia, accompanied by a delegation of 35 business representatives from defence, energy, construction and other industries.

Credit: Reuters/Beawiharta

JAKARTA (Reuters) - Indonesia's flag carrier Garuda (GIAA.JK) signed a deal for 11 Airbus EAD.PA passenger jets on Wednesday during a visit by British Prime Minister David Cameron aimed at boosting trade and investment.

The purchase of the A330 jets, worth about $2.5 billion and powered by UK-supplied Rolls-Royce (RR.L) engines, reflects the growing consumer demand that is attracting political leaders and financiers to court southeast Asia's largest economy.

"This deal between Airbus and Garuda Indonesia Airlines is great news for the UK aerospace industry," Cameron told reporters after arriving in Jakarta on a 24-hour visit.

"I think we need to recognize that so much power in the world is going to be to the south and to the east and we need to rebuild those relationships," he added, speaking on the second leg of a tour of Asia.

Cameron, travelling with a business delegation that includes defense firms such as BAE Systems (BAES.L) and Thales (TCFP.PA), also said he wanted to promote arms deals, marking a departure from British policy under the previous Labor government.

Labor had stopped arms sales to Indonesia in 1999 after British jets were used to bomb rebels. Britain now describes Indonesia as "one of the most stable democracies in Asia" and Cameron told local media that Indonesia had been "transformed" in the last decade.

Cameron's coalition government is trying to boost British manufacturing to reduce reliance on financial services and to limit exposure to the crisis-hit euro zone by doing more business with fast-growing emerging markets.

Speaking after meeting Indonesian President Susilo Bambang Yudhoyono, Cameron said both countries had agreed to boost trade and other ties, including cooperation between their armed forces and defense industries.

He also offered British aid, should it be required, after a powerful 8.6 magnitude earthquake and strong aftershocks struck off Indonesia's coast during the two leaders' meeting. There were no immediate reports of casualties or damage.

INDONESIA AVIATION EXPANDING

The new Airbus jets will increase by two-thirds the number of long-haul A330s already delivered to Garuda or on order from the airline. Its main domestic rival Lion Air in February signed a record $22 billion deal for planes from Boeing Co (BA.N).

That deal was first announced during a visit to Jakarta by U.S. President Barack Obama. Leaders from China and France also visited last year together with large delegations of executives sniffing for investment opportunities, especially to overhaul Indonesia's dilapidated infrastructure.

Indonesia is seeing a rapidly expanding aviation sector as a growing middle class, and business executives, opt to travel by air across the archipelago of 17,000 islands. Many islands lack good roads or railways, while ship connections are sporadic and slow, and deadly transport accidents are common.

Many airlines use ageing propeller planes to navigate remote and mountainous eastern provinces such as Papua, where a Garuda plane skidded off the runway on Wednesday. Garuda was removed from a European Union blacklist on Indonesian carriers in 2009.

Garuda's CEO Emirsyah Satar said he planned to use the new Airbus planes to expand in Asia-Pacific, including to China, South Korea and Australia.

Southeast Asian carriers have ordered $47 billion worth of aircraft for the coming decade.

(Writing by Neil Chatterjee; Editing by Michael Perry)

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