If GMF AeroAsia, Garuda's maintenance unit, were to be sold this year, chances are big that the proceeds are too low. Garuda now expects the IPO to be conducted in the first quarter of 2014. Preparations for the IPO are still underway. GMF AeroAsia plans to release 20 percent of its shares to the public and expects to reap about USD $100 million. These funds will be used to build a new hangar (USD $50 million) and to purchase new components (USD $30 million). Initially, Garuda's subsidiary was expected to conduct the IPO in the first half of 2013.

Garuda Indonesia's Rights Issue

No new details have been provided regarding Garuda Indonesia's rights issue. In 2011, Garuda became a listed company by releasing 30 percent of its shares on the IDX. Previously, Indonesia's House of Representatives (DPR) approved the selling of a total of 40 percent of the company's shares. The remaining 10 percent is thus subject of this rights issue. Funds will be used to expand the company's airline fleet. It is unknown when the rights issue will be conducted.

The large outflow of foreign funds weakened both Indonesia's currency and the share performance of listed companies in Indonesia. Although Indonesia's benchmark stock index (IHSG) rose 3.96 percent this year, the index has been plagued by high volatility. Only in the last three weeks, foreign funds have started to re-enter Indonesia. The rupiah has fallen 18.8 percent since 1 January 2013 according to Bank Indonesia's mid rate. Since early August, Garuda Indonesia increased its ticket tariffs by 5 percent on average to offset the impact of the depreciating rupiah exchange rate. The appreciating US dollar affects the company's cost components, such as fuel purchasing, aircraft rental costs and maintenance costs (which are all paid in the US dollars).

Despite good perspectives of Indonesia's aviation sector, Garuda's stocks have fallen sharply. This year, the company's shares fell 21.9 percent up to 17 September as profit margins in the industry have become weak amid fierce competition.