Aceh Claims Dividends from Garuda's IPO

BANDA ACEH, KOMPAS.com - The Acehnese people have the right to receive dividends from the sale of national flag carrier Garuda shares in its initial public offering (IPO), a provincial government official said.

"The plan of the central government through the ministry of state enterprises to sell PT Garuda Indonesia shares to the public is legal and acceptable," Aceh Deputy Governor Muhammad Nazar said.

However, Nazar reminded the state-owned airliner of its history in which it was born in Aceh to support the Indonesian people’s struggle for independence.

Speaking to newsmen here Sunday in response to Garuda’s move to offer its shares to the public at the price of between Rp750 and Rp1,100 per share, he said Garuda should not forget the history of its foundation. Garuda was expected not to neglect its history until it became one of the country’s "giant" enterprises at present.

"Whether or not its shares are offered to public, the people of Aceh must be appreciated by providing them with dividends or income sharing," Nazar said.

The Garuda management could do that by, for instance, regarding the people of Aceh as its first shareholder at the national flag carrier, he said. In another word, without purchasing Garuda’s shares, the Acehnese had been registered as the airliner’s first shareholders.

"Garuda Indonesia gives its dividends to the people of Aceh through, for example, cheaper flight tickets or permanent corporate social responsibility (CSR) funds," he said.

Nazar said, along with the Acehnese community leaders and members of parliament from Aceh, he would continuously fight for the Acehnese people’s rights to get Garuda’s dividends.

"I will keep encouraging PT.Garuda Indonesia to give a part of its profits to the people of Aceh," he said.

Garuda Indonesia was expected to receive a capital injection of up to US$350 million from its IPO this year, Garuda Indonesia Vice President for Corporate Communication Pujobroto said.

"We hope we will get an additional fund of around US$300 million to expand our business," Pujobroto said at the Coordinating Ministry for Economic Affairs in Jakarta recently.

He said Garuda plans to buy 11 planes this year as part of efforts to develop its business.

"In 2010, we bought a total of 24 planes. This year we plan to buy 11 more planes," he said.

The addition of planes was also designed to develop the fleet of Citilink, Garuda’s low-cost flight division, he said. According to the IPO’s prospectus, Garuda plans to buy 10 Boeing 737-800 NG aircraft, six Airbus A330-200 aircraft, five narrow-bodied aircraft for its subsidiary Citilink, and five Sub-100 aircraft.

Garuda President Director Emirsyah Satar said earlier that the IPO was expected to inject Rp10 trillion in funds to the airline. In the IPO Garuda would sell 28.93 percent of its shares. The IPO would also include the sale of state-owned Bank Mandiri’s 7.54 percent stake in the airline.