Fitch lifts Garuda to stable

Fitch Ratings said it affirmed PT Garuda Indonesia Tbk.’s national long-term rating at BBB+(idn) and revised the outlook to stable from negative.

Garuda’s senior unsecured debt class rating and rating on its outstanding Rp.2 trillion bond due in 2018 also were affirmed at BBB+(idn).

The outlook revision reflects the improvement in Garuda’s operating metrics, which were driven by lower fuel prices and cost-efficiency measures that the company implemented in the last year, Fitch said.

The agency said the improved profitability allowed Garuda to reduce its leverage to about 5.8x as of Dec. 31, 2015 from more than 9x at year-end 2014.

Primary rating concerns include industry risks that are typical for any airline, including cyclicality, high levels of operating leverage, exposure to exogenous events and fluctuating fuel prices, Fitch said.

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