Garuda Indonesia Evaluates Sponsorship Deal with Liverpool Football Club
Indonesian airline Garuda Indonesia will evaluate its sponsorship deal with English Premier League football club Liverpool within the next two months. Arief Wibowo, General Director of Garuda Indonesia, said brand awareness abroad is important and the sponsorship deal is also a source of pride for the airline. However, considering the deal costs about USD $9 million per year, the airline has to evaluate whether it is worth continuing the sponsorship deal that is set to expire in mid-2016.
Wibowo said the sponsorship deal is not only about money and brand awareness. Pointing to Emirates' sponsorship deal with Arsenal Football Club, it is also about pride of being a sponsor partner of a top football club competing in a league that is the world's most-watched football league, broadcast in more than 200 countries (thus having a potential TV audience of about 4.7 billion people).
However, contrary to Dubai-based Emirates, Garuda Indonesia does not have hundreds of million of US dollars to spend on sponsorship deals. As such, Wibowo emphasizes that, despite the importance of brand awareness, Garuda needs to safeguard a sustainable and profitable financial performance.
In early 2014 Garuda Indonesia signed a two-year deal with Liverpool Football Club to become the club's first training kit sponsor. Liverpool - as well as other Premier League clubs - enjoy a huge following in Asia, especially in Indonesia. The sponsorship deal between both parties will expire in June 2016.
Garuda Indonesia, the only listed airline on the Indonesia Stock Exchange, set aside USD $500 million for capital expenditure (capex) in 2016. However, a large chunk of these funds (approx. USD $340 million) will be injected into subsidiaries Citilink Indonesia, GMF AeroAsia, Gapura Angkasa, and Aerowisata. The capex will be financed through internal cash reserves as well as external funding (bank loans, while the company is also studying the issuance of bonds).
The USD $160 million that Garuda Indonesia set aside to spend on business expansion in 2016 will mostly be used for pre-delivery payments of 23 new airplanes (that are to be delivered next year) but also for the strengthening of the company's IT and e-commerce system.
In the first nine months of 2015 Garuda posted net profit of USD $51.4 million, up 123 percent (y/y) from the same period one year earlier (when it posted a loss of USD $220.1 million).