INVESTMENT ANALYSIS FOR THE REPLACEMENT OF PREMIUM ECONOMY TRAINS WITH EXECUTIVE TRAINS OF ARGO PARAHYANGAN A CASE STUDY: PT KERETA API INDONESIA (PERSERO

• Main Author: Irwanto, Resa
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/36349
• Institution: Institut Teknologi Bandung

Argo Parahyangan is a railway transportation service operated by PT Kereta Api Indonesia (Persero) and had good performance during the last five years. The business issue related to the business continuity of Argo Parahyangan is the operation of the Jakarta-Cikampek II Elevated Toll Road project which is feared to have an impact on decreasing occupancy rates, such as what had happened to Argo Gede and Parahyangan train services as an impact of the operation Cikampek-Purwakarta-Padalarang (Cipularang) Toll Road in 2005. PT Kereta Api Indonesia (Persero) has a plan to sell all Argo Parahyangan tickets with the executive class. Regarding the plan, this research aims to analyze the financial feasibility for replacing the premium economy trains with the executive trains of Argo Parahyangan. To analyze business situations related to business issues, the author used several analytical methods such as performance analysis of Argo Parahyangan, competitor analysis, resource and capabilities analysis as well as strengths, weaknesses, opportunities and threats (SWOT) analysis. To assess financial feasibility, the author used three parameters, namely Net Present Value (NPV), Internal Rate of Return (IRR) and payback period based on the calculation of free cash flow to the project and free cash flow to equity. In this research, the author developed three scenarios based on the different portion of equity funding and bank loans. Out of the three scenarios, the first scenario was the best scenario with a portion of 40% equity funding and 60% bank loans. Based on the calculation of free cash flow to the project, the NPV was Rp. 220,358 billion, the IRR is 45.02% and the payback period was 3.18 years. While based on the calculation of free cash flow to equity the NPV was Rp. 86,876 billion, the IRR was 72.59% and the payback period was 2.26 years. Based on these parameters, the investment project for replacing the premium economy trains with executive trains is financially feasible. The author also conducted a sensitivity analysis that produces variables that influence the financial feasibility of the project, namely occupancy rate, inflation rate, interest rate, executive train price, generator train price and dining train price