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Garuda Indonesia Is Back in Business: CEO

Submitted by on Wednesday, 20 October 2010No Comment

Flag carrier Garuda Indonesia, which was hit by a European Union safety ban, is now “back in business” and pushing ahead with expansion, including a planned share sale, its chief said on Wednesday.

Garuda is proceeding with its planned initial public offering in February to fund the expansion, including the purchase of new aircraft, chief executive Emirsyah Satar said on the sidelines of an aviation forum in Singapore.

“In the past, what we were doing was setting the strong foundation,” Satar said. “Well, we are back in business,” said Satar, who is also the airline’s president.

All Indonesian planes, including Garuda’s, were banned from EU airspace in 2007 after a series of crashes and incidents exposed poor safety standards across the country’s aviation industry.

Garuda was cleared by EU regulators in 2009 and its first flight back to the continent was to Amsterdam in June.

Satar said the airline would use the proceeds from the share sale, which he said would take place in February, to drive expansion.

Garuda has said it wants to raise $300 million to strengthen its capital structure and help fund six new Airbus A330-200 aircraft valued at $1.15 billion.

Since his appointment in 2005, Satar has piloted the flag carrier’s stunning turnaround in fortune as he undertook a massive exercise to nurse the airline back to health.

He said regaining permission to fly to Europe was crucial for the company’s reputation.

“If you look at the revenue contribution, [it] will not be significant … You are only talking about one route, Amsterdam, but symbolically we are back as a safe airline,” he said.

The carrier is aiming to ride on growth in air travel demand, especially within the Asia-Pacific region, which has already overtaken North America as the world’s largest market with 647 million travellers last year.

Garuda also has its eyes on the huge domestic market, where there is plenty of untapped potential, Satar said. “It’s both, domestically and international,” he said of the carrier’s growth plans.

The carrier wants to expand its international destinations from 18 last year to 28 by 2014 and raise the number of domestic routes to 34 from 23 over the same period.

China, Japan, South Korea, Australia and the Middle East are among the key international markets and offer much growth potential because of trade and tourism, Satar said.

“Right now, we follow where the trade and … where the tourist growth is,” he added.

Garuda, which posted a net profit of more than $100 million last year, was named the world’s most improved airline by London-based research company Skytrax in May.

Garuda is forging ahead with its planned initial public offering in February to fund the expansion, including the purchase of new aircraft, the Indonesian airline says.

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