The Indonesian government will begin to sell off its stake in national airline Garuda early next year, with parliament giving its approval for a two-stage IPO of 40% of the company’s shares. The sale is expected to raise over Rp 4 trillion (US$450 million) despite being postponed and a number of other challenges.

The initial plan for a Q3 2010 IPO was delayed due to Garuda restructuring its $240 million debt to the European Credit Agency. Another stumble occurred when a Rp 194 billion profit was misreported as a Rp 39.5 billion loss, but despite the ‘good’ news, performance this year has still been below expectations, and total net profit for this year may fall below the Rp 1.15 trillion target. Last year’s profit of Rp 1 trillion was a record.

The IPO will see an initial 30% of shares sold off in February 2011, with another 10% following at an unspecified date. Garuda plans to use some of the proceeds to train 200 pilots to fly the 24 next-gen Boeing planes it leased recently, and increase its fleet from 67 to 116 by 2014 to service new domestic and international routes.

source & article: The Jakarta Globe