Garuda slows down expansion as losses surge

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GarudaIndonesia’s national airline Garuda Indonesia will slow its international growth following a lackluster performance on international routes in the first half of 2014, which drove a net loss of $212 million. Garuda recorded an average international load factor of only 63 per cent in the period.

Competition in the Indonesian international and broader Southeast Asian market has intensified, making life extremely tough for Garuda just as the carrier attempts to make a bigger international push following its ascension into SkyTeam. The introduction of five 777-300ERs over the last year has contributed to overcapacity, just as its long-haul strategy has had to be revised.

Garuda has responded to the unfavourable market conditions by deferring plans to launch services to India and the Philippines. The carrier is also now planning to cut unprofitable routes and reduce capacity growth by deferring aircraft deliveries.

Garuda incurred a group operating loss of $234 million in the first half of 2014 compared to an operating profit of $14 million in the same period in 2013. On a net level, the loss widened from $11 million in the first half of 2013 to $212 million in the first half of 2014. Group revenues were up 1 per cent to $1.738 billion.

Garuda in April 2014 again adjusted its plans for London and is now only planning to serve London Gatwick as a tag from Amsterdam starting from November 2014. Garuda no longer intends to serve London non-stop and also has shelved any consideration for additional European destinations. Garuda previously was aiming to serve Paris, one destination in Germany (Berlin, Frankfurt or Munich were being evaluated) and one destination in Italy (Milan or Rome).

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Reading Time: 1 minute

Indonesia’s national airline Garuda Indonesia will slow its international growth following a lackluster performance on international routes in the first half of 2014, which drove a net loss of $212 million. Garuda recorded an average international load factor of only 63 per cent in the period.

Reading Time: 1 minute

GarudaIndonesia’s national airline Garuda Indonesia will slow its international growth following a lackluster performance on international routes in the first half of 2014, which drove a net loss of $212 million. Garuda recorded an average international load factor of only 63 per cent in the period.

Competition in the Indonesian international and broader Southeast Asian market has intensified, making life extremely tough for Garuda just as the carrier attempts to make a bigger international push following its ascension into SkyTeam. The introduction of five 777-300ERs over the last year has contributed to overcapacity, just as its long-haul strategy has had to be revised.

Garuda has responded to the unfavourable market conditions by deferring plans to launch services to India and the Philippines. The carrier is also now planning to cut unprofitable routes and reduce capacity growth by deferring aircraft deliveries.

Garuda incurred a group operating loss of $234 million in the first half of 2014 compared to an operating profit of $14 million in the same period in 2013. On a net level, the loss widened from $11 million in the first half of 2013 to $212 million in the first half of 2014. Group revenues were up 1 per cent to $1.738 billion.

Garuda in April 2014 again adjusted its plans for London and is now only planning to serve London Gatwick as a tag from Amsterdam starting from November 2014. Garuda no longer intends to serve London non-stop and also has shelved any consideration for additional European destinations. Garuda previously was aiming to serve Paris, one destination in Germany (Berlin, Frankfurt or Munich were being evaluated) and one destination in Italy (Milan or Rome).

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