The Asian economic slump is reinforcing industry opinion that the outlook for Indonesian carrier Garuda is bleak.
Aviation analyst Nora Chang of HSBC James Capel echoes the general industry view when she rates Garuda's survival chances as 'poor'. But the Indonesian carrier is desperately cutting costs in a bid to ride out the economic storm.
The first measure taken has been sale and leaseback deals. Bids were due on 14 April for four Boeing 747-200s and five Airbus A300s, says Garuda's procurement director Sabur Taufik. Garuda had tried to sell five DC-10-30s but withdrew them from the market after failing to obtain the US$14.5 million asking price.
Chang warns that while revenue from the deals may bring much needed US dollars and boost cashflow, this money is also needed to fund long-term fleet renewal.
Garuda is also dropping services from Jakarta to Manila, Bangkok and Canton and from Medan to Kuala Lumpur and Singapore until 24 October, while suspending its Jakarta-Los Angeles service for two months.
Garuda pledges only to axe jobs, however, as a last resort. 'We are not planning job cuts yet but if we can't keep our nose above water then we'll have to,' says Taufik. Bouraq Indonesia Airlines suspended 300 staff in March with 900 more suspensions expected in April.
Chairman of the Indonesian National Air Carriers Association Hadisoemarco Soelarto acknowledges that he is 'hopeful rather than optimistic for the future' of Indonesian carriers. Cutting routes and shedding capacity are short-term solutions but Soelarto stresses the need to maintain cashflow.
Source: Airline Business
