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EU set to lift Indonesian Flag Carrier, Garuda, Ban

Jakarta, Indonesia | July 01, 2009 by D-8 Secretariat

Garuda is deploying its aircraft to more prospective and profitable routes around the world

Garuda is deploying its aircraft to more prospective and profitable routes around the world

According to the Financial Times, the European Union is this week expected to lift a two-year ban on Garuda Indonesia, the country’s national airline, paving the way for plans to take the company public on the back of an extensive makeover.

European and Indonesian officials say they are “confident” that Garuda will not be on the EU’s next quarterly list of airlines banned from the region when it is published later this week.

All 51 registered Indonesian airlines were banned in June 2007 following a slew of deadly accidents that exposed systemic flaws in the aviation sector’s supervision as well as problems within airlines.

The incidents included a Garuda crash in Yogyakarta, central Java, in March 2007 in which 21 people were killed. The pilot of that plane has been imprisoned for two years for criminal negligence.

No Indonesian airlines operated flights to the EU at the time, but the EU warned its citizens against flying on Indonesian airlines anywhere.

Since then Indonesia has instituted reform, including passing a new aviation law, grounding airlines such as AdamAir and shaking up regulatory bodies.

Jusman Djamal, Indonesia’s transport minister, said last month that only three of 121 violations found by the EU’s aviation sector audit team in 2007 remained outstanding.

Officials are less certain about whether the ban will be lifted on three other airlines that Jakarta believes are ready to fly to Europe.

Garuda remains one of the few big global airlines whose profits are rising, thanks mainly to robust domestic demand. It has also rescheduled the majority of its $650m of debt and is taking delivery of new, more efficient aircraft.

Garuda’s net profit in the first four months of 2009 was Rp326.1bn ($32m), up 515 per cent from the same period last year. Net profit for 2008 was Rp669bn, against Rp60bn in 2007.

The Association of Asia Pacific Airlines has reported that its 17 members, which include Garuda, made a combined loss of $4.3bn last year. The International Air Transport Association has forecast that the region’s airlines will suffer losses of $1.7bn this year.

Emirsyah Satar, Garuda’s chief executive, said the airline had “come a long way” in the past two years. Technology had been installed on aircraft to monitor pilot behaviour, staff numbers had been cut by 15 per cent to 5,200 and service standards had increased, he said.

If the EU ban is lifted, flights to Amsterdam are set to start early next year, with London and Frankfurt following soon afterwards.

Mr Emirsyah said the government had given approval for Garuda to float a minority of its shares.

“If it hadn’t been for the financial crisis, we’d have wanted to be public by now,” he said. “We now aim to go public in the middle of next year.”

D-8 Secretary General welcomes this news in a very positive resonance. He said that Garuda has proved itself as a professional and capable flag carrier, deploying its aircraft to more prospective and profitable routes around the world.

In collaboration with the Turkish DGCA, D-8 will hold a wide range D-8 Summit (in aviation) in Istanbul after Ramadhan (Eid-ul Fitr). Following that event, a D-8 Ministerial Meeting on Transport will also be held in Istanbul on November 2009.

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