Strategic Financing for Aircraft Project & Production of N219 (Case Study: PT Dirgantara Indonesia (Persero))

• Main Author: Anwar Musaddad - 29116150, Mochamad
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/28956
• Institution: Institut Teknologi Bandung

Indonesia is listed as the fourth largest country with the highest passenger growth in the world and the fifth largest country in the domestic aviation market. Based on IATA projection, Indonesian air passengers will grow by 183 million in 2034 (growth of 5 - 6% per year). <br /> <br /> Project N219 is the first aircraft commuter project in indonesia started since 2014 by PTDI. The development of N219 aircraft funded by Government through LAPAN since the fiscal year 2014. There was more than USD 30 million government spent since 2014 to cover design phase until N219 first flght. Currently the focus is to achieve certification in 2018 and first delivery on time to avoid lost opportunities. The N219 commercial aircraft will be the company's flagship product for marketing, especially in the domestic and regional. It was also the implementation of flight law number 1, 2009. <br /> <br /> The problem must be faced by PTDI in 2018, when the LAPAN budget for the development of N219 aircraft is only available Rp 37 billion (equivalent USD 2,8 million), while on the other hand PTDI still need amount USD 100 million to complete the certification process, preparation for customer support and industrialization phase. Then PTDI is also faced with the unavailability of customer financing facilities that can support the successful sale of N219 aircraft, considering the N219 aircraft is a new aircraft and has never received the certification of air worthy and coupled with poor financial performance in 2016. On the other hand, Indonesia banks has no experience in financing of aviation industry. It makes customer financing strategy is the toughest home work of PTDI after the LAPAN budget shortages over the development costs of the N219 aircraft. <br /> <br /> The corporate action to solve issue in N219 aircraft development cost can be done with the 3 (three) alternatives strategy. There are corporate bond, mixed debt and equity funding and vendor financing. Each strategies have different characteristic and risk of profil. The 2 strategies have explained before should to involve the prime vendors which consist of more that 12 vendors. PTDI have to create long term agreement with the prime vendors to supplying 400 units of major components in the next few years with the conditions of they will help PTDI to explore the Investors / Lessors which will be used to do N219 customer financing. The corporate bond and do the mixed equity and debt funding are possible to do but not eligible for PTDI, the best alternative is to do vendor financing. This alternative will save much of money, lots of time, and also effort due to highly competition of aircraft manufacturer industry.