Garuda Indonesia outlook brightens as slower international expansion leads to financial improvement

Garuda Indonesia's decisions to slow its international expansion and raise domestic fares have led to a significant improvement in profitability in recent months following a dismal 1H2014. The airline group remained in the red in 3Q2014 but the loss was very small compared to 1H2014 and Garuda had a profitable month in Sep-2014.

Garuda is planning to resume some international growth in 2015. But the growth will be relatively modest and Garuda has made sensible adjustments to its fleet plan, deferring some deliveries and opting against acquiring additional widebody aircraft.

Garuda's ability to recover from the challenges of 1H2014 puts the group in a relatively strong position as longstanding CEO Emirsyah Satar exits after 10 years at the helm. Mr Satar's replacement will still face challenges but Garuda is now a vastly more capable force than a decade ago to compete in the increasingly difficult Southeast Asian marketplace.