Garuda, Adam Air and the Offer

I'm not being a conspiracy theorist, but just trying to perceive some information related to the Indonesian airline business and issues/problems arising prior to and at this moment.

Adam Air offer

We understand that 40% of Adam Air's stake was planning to be sold to Qantas and in Singapore market in Feb 2006.

Adam Air said Friday it would sell 20 percent of its shares to Qantas. "The Australian company actually offered to buy 30 percent of the shares but we are only prepared to sell 20 percent because another 20 percent will be sold during Adam Air's initial public offering (IPO) in Singapore next year," Adam Air's chief executive officer Gunawan Suherman said Friday.

However, since Adam Air disappearance, the plan also disappeared as it's not really attractive anymore.

But, what if the offer price is lowered plus significant contribution of more professional aviation management?

Garuda offer

We know that just last month (19 Feb 07) up to 49% of Garuda's stake was planning to be sold following the refinancing plan of a $749 million debt.

The Indonesian government hopes the privatization of debt-ridden state airline PT Garuda Indonesia will be completed in the first half of this year, a minister said Monday.

The government announced earlier this year that it is seeking strategic investors to purchase up to 49% of the flag carrier.

Surprisingly, the last wednesday (7 Mar 07) fire which burnt 21 passengers seemed to still flame the spirit of privatisation.

The Garuda Indonesia air disaster on Wednesday appears to have had minimal commercial effect, with few ticket cancellations and a commitment by the airline to push ahead with its privatisation program.

Of course the value is getting lower after now and 49% may influence almost half of the management.

If

If both plans are carried on and Adam Air or Garuda is going to be half-managed by foreign airlines which are believed to be more capable in terms of safetiness, then customers confidence may reach a considerable level for Adam Air or Garuda to win the competition. Although, high air fare is the consequence. This may be followed by other Indonesian airlines.

Buying the Technology

Interesting story from The Age pointing out Indonesia incapability to read Garuda black box was admitted by the former head of Indonesia's National Safety Committee, Prof Diran.

"The black box is being recovered and I think (brought) to Canberra," Professor Diran said."The Australian Government proposed to get a read-out in Canberra, we accept that of course because we don't have the facilities for that."

From now, Indonesia government is supposed to have been thinking in buying "the facilities" from overseas. One new customer for the suppliers, one new item in the budget. Remember the tsunami buoys.

Aviation Consultancy

If we google "aviation consultants", there is a huge list for it. Some may put interests in Indonesia. Or, to improve the whole aviation infrastructure (air-traffic controllers, pilots, cabin crews, support staff, airports management), some aviation consultants might be considered to be hired. One business opportunity opens in Indonesia.

If there is a conspiracy theory

Airline business is a big business in Indonesia boomed in 2000s, similar to the oil business boomed in 1970s with similar experience in how some foreign corporations entered the onshore and offshore oil business in Indonesia. The difference is that the target now is domestic market.

There could be a battle of two sides between a group who is trying to make airline and aviation business not attractive ("unattractive group") for foreign investors and another group who is trying to make it attractive ("attractive group").

Sabotage and Failed

If both accidents are the results of sabotage as some people first thought, it could have been set by "the unattractive group". However, considering the lower valuation could have been impacted in the offering, this might have become even more attractive. Otherwise, this might have been planned by "the attractive group" for the purpose of lowering the offer value.

Let's see

We may allow five years time from now to see the development of airline and aviation business in Indonesia. We can see which airlines or airports are going to be controlled by foreign investors and which are not. We may also consider national conglomerates to take control.

Data

Indonesia has 23 active domestic airlines and 213 airports with 21 international airports.