Indonesia's Citilink to buy new planes, may list by 2015

JAKARTA Fri Jun 14, 2013 8:20am EDT

1 of 2. Citilink chief executive Arif Wibowo poses for a picture in the cabin of an Airbus A320 at its hangar facility in Jakarta June 14, 2013. Indonesian budget carrier PT Citilink Indonesia, a unit of state-owned carrier PT Garuda Indonesia, plans to expand its fleet to 50 planes and sell a 30 percent stake in a public offering by 2015, CEO Wibowo said on Friday. Citilink currently operates 29 aircraft and plans to add 21 new Airbus 320s over the next two years to help the company reach its target to carry 16 million passengers by 2015, about a four-fold increase from 2012.

Credit: Reuters/Enny Nuraheni

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JAKARTA (Reuters) - Indonesian budget carrier PT Citilink Indonesia, a unit of state-owned carrier PT Garuda Indonesia (GIAA.JK), plans to expand its fleet to 50 planes and sell a 30 percent stake in a public offering by 2015, the company's CEO said on Friday.

The growth race among airlines in Southeast Asia is heating up after passenger traffic in the Asia-Pacific region more doubled between 1998 and 2012, putting air travel activity on a par with North America.

But the region's low cost carriers are struggling to make a profit due to thin margins, with many lacking the huge cash flows required to sustain loss-making fares, stump up money to acquire coveted landing slots and fund new aircraft.

"This year we don't plan as a profitable company ... in order to make sure we got the market share and we have to have enough capacity," Citilink's chief executive, Arif Wibowo, told Reuters in an interview.

"We have to improve our performance and then we are considering an IPO."

The company posted a $28.4 million loss on operating revenue of $73.4 million in 2012. It aims to reach $1 billion in revenue by 2015 by flying 16 million passengers in 50 aircraft.

Citilink had 2.8 million passengers last year, while rival AirAsia had 4 million passengers. With its current 17 percent market share in the low cost carrier segment, Citilink is targeting 19 percent by end of the year and 29 percent in the next 5 years.

That would mean more pressure on domestic market leader Lion Air and the region's biggest budget carrier AirAsia Berhad (AIRA.KL), which is struggling to expand in Indonesia despite a major push to set up its regional office in Jakarta.

Citilink is also planning a regional expansion next year, eyeing 7 destinations in Singapore, Malaysia, Thailand and northern part of Australia, Wibowo said from the cockpit of his firm's newest Airbus A320 aircraft in its Cengkareng airport facility.

(Reporting by Andjarsari Paramaditha; Writing by Janeman Latul; Editing by Mark Potter)

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