GARUDA DEFENDS 2018 RESULTS

Indonesian carrier says US$211.9m revenue booked from Mahata will not go away even if deal is terminated

PT GARUDA Indonesia defended the validity of its finances for last year after a regulator raised questions about how the national carrier accounted for certain transactions, including with a startup

technology company.

The airline booked revenue of US$211.9 million (RM879.39 million) from PT Mahata Aero Teknologi in exchange for the rights to provide inflight entertainment and Internet connectivity on Garuda’s flights, its annual report showed.

The contribution helped Garuda to report a net income of US$809,846 last year compared with a loss in 2017.

“The accounting rule requires us to record the transaction in such a way,” said Fuad Rizal, its director of finance and risk management.

“Even under an extreme situation where the contract was terminated by Garuda or by Mahata, our rights over the receivables will not go away.”

His comments came days after Indonesia’s Financial Services Authority (OJK) said it would scrutinise some dealings that might affect Garuda’s financial results for last year.

The agency said it might impose sanctions on the company or its auditor if wrongdoing was uncovered.

“Garuda has no risks in this contract and we don’t have to incur any expenses,” said Fuda. “Only Mahata can offer a business concept where Garuda or the airline doesn’t have to incur any expenses to provide airborne Internet connection for the customers.”

The group was Mahata’s only customer, said Thomas Widodo, the tech firm’s business development director.