Garuda Indonesia
Overall figures in line

Expansion stayed on track as GIAA increased its fleet to 106 aircraft. Furthermore, the utilization rate remained solid as the SLF and utilization numbers were strong despite the higher capacity. Fuel costs – which constitute the largest chunk of GIAA’s total costs – only inched up 1% YoY, or as expected. Overall, we remain upbeat on
the company. BUY maintained with a TP of Rp940, implying FY13 EV/EBITDAR of 4.95x.

Expansion on track with 106 aircraft in its fleet

GIAA had 106 aircraft in its fleet at the end of December 2012 (one more than we had estimated earlier this year), as the company added 22 new aircraft whilst getting rid of three. The additional aircraft were deployed on short to medium haul routes and comprised of A330-200, B737-800 NG, CRJ 1000 NG and A320-200 for Citilink. In an effort to leverage its fleet, GIAA made some changes to its routes (see exhibit 3). This, in turn, boosted its flight frequency figure by 17.9% YoY to 153,266 at the end of December 2012. The overall capacity, meanwhile, climbed 10.9% YoY to 36,014 mn km in FY12 - or in line with our full year estimate.

Better utilization rate with the highest passengers carried growth of 76% YoY coming from
Citilink

Despite the higher capacity, GIAA still posted better RPK as the SLF and aircraft utilization remained strong. The overall SLF inched up 0.68% YoY in FY12 as the total number of passengers carried continued it double-digit growth. The highest growth came from Citilink which posted a 76% YoY increase in passengers carried during the year to 2,861 thousand in FY12 - albeit falling short of our estimate. However, as Citilink contributed less than the other segments, the overall passengers carried remained in line with our full year forecast.

Fuel costs up slightly by 1% YoY - as expected

Crude oil prices were volatile throughout the year but exhibited a slight upward trend (+0.5% from early 2012), thereby impacting the jet fuel price which rose 2% from early 2012 (please see exhibit 6). As fuel costs account for more than 30% of the total costs, the volatility in prices has a direct
impact on the bottom line. Based on our sensitivity analysis, a 5% change in the jet fuel price results in an 11% change in the FY12 EBITDAR. In FY12, GIAA’s average jet fuel price was USc 91/liter, up only 1% YoY, or pretty much in line with our jet fuel price assumption.

me @ LOTS Trading Club (LTC)