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Garuda Profits for 2003 Expected to Plunge

Numerous Factors Cited in Anticipate Drop in Profits of Up to 80%.

(12/1/2003) Citing the SARS Panic, the Iraqi war, and world-wide terror fears as the underlying cause - Garuda Indonesia is anticipating a drop by as much as 80% in their profits for the fiscal year 2003.

The Airlines President Director, Mr. Indra Setiawan, has projected profits of only Rp. 100 billion (approximately US$ 11.67 million) for the current year, compared to Rp. 503 billion (approximately US$ 59.17 million) from just one year before. Pointing to an improving business environment, Garuda's Chief Executive was optimistic that profits for 2004 would continue to improve, expecting profit results of something between Rp. 300 400 billion.

Mr. Setiawan blamed the SARS panic, the invasion of Iraq and domestic terrorist threats as the major contributors to Garuda's sub-par performance in the current year.

During the first quarter of this year the Airline managed to book a profit of Rp. 32.77 billion, down from a targeted Rp. 116.8 billion as the carrier struggled to overcome the sudden drop in passengers due to the October 2002 terrorist attack in Bali. In order to maintain profitability, Garuda undertook dramatic steps throughout 2003 including closing unprofitable routes to China; stopping flight operations between Medan (North Sumatra) and Singapore; and reducing flight frequencies to Japan, Australia and the Middle East.

In November of 2001 Garuda Indonesia restructured its debt. Because of that restructuring the Carrier managed to pay US$ 114.77 million dollars in principal and interest in 2002 due to enhanced operational efficiencies. It is unclear how the reduced revenues and profits for 2003 will impact the Airline's ability to meet its restructured debt obligations.