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NEWS UPDATES 21 October 2010

Garuda ready to take off

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Indonesian flag carrier Garuda is "back in business" and moving forward with plans for an initial public offering (IPO) and expansion, just months after a European Union travel ban was lifted, the airline's president director said on Wednesday.

The airline plans to hold an IPO in February to fund the expansion, including the purchase of new aircraft, Emirsyah Satar said on the sidelines of an aviation forum in Singapore.

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

Garuda, which saw its profit fall by 80 percent in the first half of the year, had hoped to generate $400 million by floating 30 percent of its shares.

Last month it postponed its IPO, which had been slated for November.

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

Garuda also has its eyes on the huge domestic market. Emirsyah said there was plenty of untapped potential there.

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

Since his appointment in 2005, Emirsyah has piloted Garuda's stunning turnaround as he undertook a massive exercise to nurse the airline back to health.

Looking back five years when Garuda was suffering financial problems, he said it had no choice but to make tough decisions, including shedding staff and streamlining the company.

But apart from losing money, Garuda was facing huge debts, poor aircraft utilization and was operating on mostly unprofitable routes, he said.

"We did a complete and honest analysis of the business. We really had to admit what went wrong, and I always believe if something goes wrong, blame it on yourselves instead of others," he said.

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