Indonesian airline Garuda 2013 profit slumps on weak rupiah

JAKARTA, Feb 10 (Reuters) - Indonesian flag carrier Garuda Indonesia said a weak rupiah currency battered its 2013 net profit and warned that a break-neck expansion in the global airline industry was leading to overcapacity.

Garuda is building up its fleet on expectations that the country's 240 million people will travel between the archipelago's myriad islands and internationally.

But carriers in the region, such as Lion Air, Malaysia's AirAsia Bhd and PT Mandala Airlines, now face potential overcapacity as deliveries accelerate and airlines expand into each other's markets.

"There's so much overcapacity and there will be consolidation," Garuda's chief executive, Emirsyah Satar, told reporters on the sidelines of a briefing. "The growth is there. But the problem is how we manage that growth in terms of both fund raising and the network."

A weak rupiah has added to the industry pressures. The Indonesian currency tumbled around 26 percent against the dollar last year on concerns about the widening current account deficit in Southeast Asia's largest economy and the tapering of the Federal Reserve stimulus.

Garuda posted a 90 percent drop in net income to $11.0 million for the full year ended December from $110.6 million in 2012. That came far below the $44.4 million average estimate of five analysts, according to Thomson Reuters data.

Garuda is looking for strategic investors for its low-cost unit Citilink, with the ultimate aim of taking it public, Satar said, declining to disclose a specific timeline for when the initial public offering (IPO) may happen.

"Looking into the future, ultimately we want Citilink to IPO. The partner that we are looking for is a partner that does not just bring in capital, but also the know-how and experience in running low-cost carriers," Satar said. (Reporting by Eveline Danubrata; Editing by Louise Heavens)