Garuda Loses US$99.1 Mil­lion in First Quar­ter of 2017

Indonesia Expat - - BUSINESS PROFILE -

In­done­sia's high­est rank­ing air­line, Garuda In­done­sia, has posted a Rp.1.32 tril­lion (US$ 99.1 mil­lion) loss for the first quar­ter of the year, a dis­ap­point­ing fol­low up to 2016, a year in which the car­rier re­duced loses by 11.9 per­cent.

Garuda In­done­sia Pres­i­dent Di­rec­tor Pa­hala Mansury said there are sev­eral fac­tors con­tribut­ing to the loss this year. Op­er­at­ing costs have risen by 21.3 per­cent, in­clud­ing a 54 per­cent in­crease in fuel prices. Spend­ing on fuel dur­ing the first quar­ter of 2016 reached Rp. 2.5 tril­lion (US$189.8 mil­lion), while in the same pe­riod this year it reached Rp. 3.9 tril­lion (US$292.3 mil­lion).

“There has been an in­crease in fuel and other costs in­clud­ing ser­vice costs and the reser­va­tion sys­tem,” Mansury said dur­ing a press con­fer­ence at the Garuda of­fice on April 28. Ad­di­tion­ally, costs from air­craft rentals in­creased from Rp. 3.29 tril­lion (US$246.9 mil­lion) to Rp. 3.43 tril­lion (US$ 257.4 mil­lion). “The travel in­dus­try tended to slow down for the past five years and cus­tomer pur­chas­ing power grew weaker ear­lier this year, which has a di­rect ef­fect on fi­nan­cial per­for­mance of the com­pany,” said Mansury.

The com­pany has out­lined five strate­gic steps to tackle the prob­lem, in­clud­ing re­duc­ing fleet costs and look­ing into route op­ti­miza­tion. The com­pany plans to re­view ten to 20 routes to be ter­mi­nated based on flight load fac­tors, Mansury said.

“We have more do­mes­tic routes. At least we would choose ten routes with load fac­tors below 10 per­cent and five in­ter­na­tional routes that yield below 70 per­cent,” he added.

Pos­si­ble in­creases in ticket prices and route changes have also been tipped, with an of­fi­cial an­nounce­ment ex­pected in the com­ing weeks.

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