Garuda books 50% rise in net profits despite lower revenues

PT Garuda Indonesia booked about 50 percent in net profits last year up to Rp 1 trillion in 2009 from about Rp 669 billion in 2008 despite a significant decline in the company’s overall revenues, the national flag carrier’s top executive said.

Speaking in a press briefing in Jakarta on Wednesday, Garuda’s president director Emirsyah Satar said that total revenues dropped to Rp 16.7 trillion in 2009 from Rp 18 trillion in 2008, although the number of passengers rose by 3 percent.

 “Last year, the price of avtur dropped by 40 percent. As a consequence we had to lower fares. This was the reason why Garuda’s revenue dropped,” he said.

He said total revenues as well as the number of passengers were both expected to increase by 15 percent this year. “We will increase the number of new airplanes and will open more new routes to be able to meet the target,” Emirsyah said,

He added that the airline also planned to purchase 23 new B737-800s and an A330-300 within the next few years.

Garuda commercial director Agus Priyanto said this year Garuda would open five new domestic routes that would link Ambon, Ternate, Bengkulu, Tanjung Pandan, and Palu and seven new international routes including Jakarta-Dubai,  Dubai-Amsterdam, Jakarta-Taipeh, Hongkong-Surabaya and Denpasar-Hongkong.

The inaugural flight for the Jakarta to Dubai and Dubai to Amsterdam routes would take place on June 1,  he said.

Emirsyah said the airline was also restructuring its remaining bad debts worth US$527 million with a number of creditors. ”We hope we will be able to settle the debt problems before the launching of our initial public offering [IPO] in the third quarter of this year,” he added.

He said that Garuda still owed about $527 million as of January, this year  to nine domestic and foreign financial institutions, down from $886 million in 2006.

About $241 million of the outstanding debts were owed to the European Credit Agency, $95 million to other foreign lenders, and $105 million to local companies including Pertamina, Bank Mandiri and state airport operator Angkasa Pura I.