Garuda Indonesia will slow international expansion and defer aircraft following a dismal 1H2014

Garuda Indonesia will slow its international growth following a lacklustre performance on international routes in 1H2014, which drove a net loss of USD212 million. Garuda recorded an average international load factor of only 63% in 1H2014 as RPKs dropped by 3% despite a 15% surge in ASKs.

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.