Garuda Loses US$99.1 Million in First Quarter of 2017

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.