To take on competition from fast-growing ride-hailing app-based service providers, Indonesia-based conventional taxi operator Blue Bird has secured a $74 million (IDR 1 trillion) financing facility from Bank Sumitomo Mitsui Indonesia (SMBC Indonesia) to fund its fleet expansion plans.
The announcement comes amid reports of layoffs of 400 employees by another conventional taxi operator, Express Transindo Utama, last week.
“This new facility will offer us with an option to finance fleet purchase with lower interest rate by at least 100 bps compared to our existing interest rate,” said Fransetya Hutabarat, Bluebird CFO, in a statement to investors.
“The banks still see us as fundamentally strong. This new facility will give us a competitive edge in terms of financing cost, but rest assured that the company will remain prudent in utilizing this loan,” Hutabarat added.
The fully-committed facility is equipped with four years tenure and two years of availability period.
Previously, Blue Bird obtained IDR 800 billion of clean basis working capital facility – which is still available to be withdrawn – of IDR 300 billion from BTMU and IDR 500 billion from SMBC.
Blue Bird and Express, two of Indonesia’s largest conventional taxi operators, are struggling to curb their financial losses amidst fierce rivalry with on-demand ride-hailing apps.
Aside from laying off its 400 staff, Express also plans to sell several of its asset buildings, one bus and 136 cars to help it pay off IDR 2.5 billion ($185,130) debts. It will continue to sell assets to collect IDR 3.5 billion.
From January to June 2017, Express’ revenues fell from IDR 374 billion to IDR 158 billion.