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Garuda sees increasing loss in Jan.-Sept. performance
National flag carrier Garuda Indonesia wrapped up the first nine months (Q3) of the year falling short of deflating its burgeoning comprehensive loss, which amounted to US$206
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ational flag carrier Garuda Indonesia wrapped up the first nine months (Q3) of the year falling short of deflating its burgeoning comprehensive loss, which amounted to US$206.40 million as of September, hauled by ballooning costs of fuel needs.
The publicly listed airline, however, said that business was good during the quarter, and the firm managed to push down its quarter-on-quarter losses.
A financial statement published on the Indonesia Stock Exchange (IDX) website on Thursday revealed that the airline recorded up to $206.40 million in comprehensive losses in the first nine months of 2014, skyrocketing from $32.54 million recorded in the same period last year.
The company's operating income during the January-September period rose by 4 percent to $2.80 billion from $2.69 billion in the first nine months of last year.
Despite the growth in revenue, Garuda ' the company's written statement said ' failed to pull down its net loss as the dwindling global macroeconomic conditions, coupled with rising operational costs and the rupiah's depreciation against the dollar, have eroded a chunk of its income.
'Global economic slowdown resulted in lower demand for international flights and further impacted Garuda's performance and other airlines, especially in Asia-Pacific where competition has grown tighter,' Garuda president director Emirsyah Satar said in the statement, adding that the entry of new competitors from the Middle East has provided further challenges for the carrier.
'Further, rupiah depreciation and rising fuel prices have also suppressed our profits, given that fuel costs are the biggest component of our total costs, contributing around 40 percent.'
The airline's operating costs went up by nearly 13 percent to $3.05 billion during the reported period, from $2.70 billion last year.
The loss in the third quarter, however, was below the $47.82 million it recorded in its April-June financial sheet and the even higher loss of $163.89 million it registered in the first quarter of the year.
The company booked $400,000 of net profit in August and $22.1 million in September, indicating a pickup in performance, the company's statement read.
'In line with cycles in the aviation industry that tend to improve in the first half, our company's performance has also shown a positive performance in Q3-2014, especially in August and September, in accordance with rising demand as well as the observance of the haj pilgrimage during those months,' Emirsyah said.
As of September, the state-run carrier managed to fly 20.9 million passengers, around 15.2 percent more than the same period last year. Garuda transported 292,888 tons of cargo in the first nine months of this year, growing by 15.4 percent compared to last year.
The carrier also saw a 15.4 percent increase in its domestic flights to 165,642 flights between January and September, from 143,499 flights.
Its low-cost carrier unit Citilink, on the other hand, saw a 39.3 percent year-on-year passenger increase to 5.3 million passengers as of the third quarter.
Garuda Indonesia's grip on the country's market was up by 1.5 percent to 29.4 percent in the third quarter of this year, from 27.9 percent in the same period last year.
Its domestic passengers rose by 7.4 percent year-on-year as of August, above the domestic aviation industry, which saw annual negative growth of up to 3 percent during the period.
Back in July, Garuda canceled its plans to open two new international routes this year ' Jakarta'Manila and Jakarta'Mumbai ' as it was suffering from increasing losses.
The company has also closed less-profitable routes, including Jakarta-Taipei, as part of an efficiency campaign.
It has also reduced its capital expenditure by $54 million this year, as well as temporarily ceasing the operation of its more fuel-intensive aircraft and delaying the arrival of new aircraft it has ordered.
