Garuda Indonesia

Topics: Airline, Garuda Indonesia, Avianca Pages: 4 (1420 words) Published: October 6, 2014
Introduction
Garuda Indonesia is the 2nd largest airline service company in terms of plane fleet that aims to be world’s top 10 by 1998. Garuda Indonesia is an airline company owned by the Indonesian Government. The airline has been vastly developed since being established in 1950. Remarkable growth has been achieved mainly due to the fact that in the early years there was minimal competition in the airline industry in Indonesia. Being the fi rest Indonesian airline, Garuda Indonesia monopolized the commercial air transportation services. This situation allowed more than reasonable company performance for many years. However, since the government introduction of an open domestic airline industry in 1990, Garuda Indonesia started to face diffi culties. Garuda competed against a number of private airlines, which possessed expansive strategies in developing routes as well as increasing the number of aircraft. The performance of Garuda Indonesia gradually decreased to a low when operational profi t and cash flow reached negative fi gures during the period 1993 to 1997. Further, the seat load factor and on time performance were also worsening. To overcome these problems, restructuring was fi rst undertaken during 1998 to 2001. The fi rest restructuring was quite successful in reinventing the performance of Garuda Indonesia, indicated by positive operational profit and improved cash-flow. Unfortunately, Garuda Indonesia’s performance decreased once again after the appointment of new management in 2002. The new management tended to be inconsistent in implementing company business strategies. Operational profit gradually decreased from 2003 and this continued to 2005. By 2005, the financial and operational conditions of the company were considered to be worse than the previous problems faced in 1997. To improve the performance, new management was appointed again in 2005. This new management then started the second restructuring of Garuda Indonesia. The effort was once again quite...
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