TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Garuda aims to be back in the black this year
With efficiency measures in place and expected passenger growth, national flag carrier Garuda Indonesia aims to turn last year’s loss into profit this year
Change Size
W
ith efficiency measures in place and expected passenger growth, national flag carrier Garuda Indonesia aims to turn last year’s loss into profit this year.
The airline seeks to post US$4.9 billion in revenue in 2018, up 22.5 percent from an estimate $4 billion last year.
In line with that, it hopes to raise its net income to $8.7 million, reversing the loss it has anticipated for 2017. From January to September last year, Garuda recorded $221.9 million in losses.
“In 2018, we hope to become a profitable company again,” Garuda finance director Helmi Imam Satriyono said on Tuesday.
The firm aims to settle its profit at $170 million by 2020.
Garuda attributed the significant losses seen over the first three quarters of 2017 to its participation in the tax amnesty and the legal settlement of an air cargo fixing case in Australia, which respectively cost $138.3 million and $7.5 million. It described both as “extraordinary occurrences.”
To generate profit, the carrier will rely largely on reducing fleet lease costs, driven by
renegotiations of nine aircraft, and a two-to three-year postponement of the delivery of around 20 aircraft between 2017 and 2019. The expenses make up 25 percent of Garuda’s overall operational costs.
“The lease [renegotiation] can cut down costs by 25 percent, so it can improve our cost structure,” Helmi said.
Garuda has 144 aircraft as of December, while its low-cost subsidiary, Citilink controls 58.
It claimed that throughout last year, it saved $113 million through various cost efficiency measures, exceeding a $100 million target.
The airline will depend on the higher number of passengers it serves throughout 2018 as a major contributor to its revenue increase. It aims to see a 13 percent increase in passengers from 2017.
Garuda served 17.8 million passengers in the January-September period last year, similar to a year earlier. Combined with Citilink, the group flew 26.8 million passengers in the same period, out of 40.4 million targeted for the entire 2017.
Helmi said that Garuda expected the figure to remain high this year, owing to the optimistic economic and business outlook in Indonesia. To help meet its passenger target, the carrier will continue expanding its international routes, which it claimed was raising favorable revenue.
In January alone, the airline is slated to open two new routes connecting Denpasar, Bali, and two Chinese cities, Xi’an and Zhengzhou.
Garuda’s subsidiaries, which include aircraft maintenance, repair and overhaul firm PT GMF AeroAsia, are expected to contribute 24 percent of this year’s total revenue. As of the third quarter last year, GMF AeroAsia revenue made up 22.1 percent of the group’s entire revenue.
Responding to lingering concerns over efficiency measures, Garuda assured it would neither dismiss its pilots nor compromise safety.
Garuda operational director Triyanto Moeharsono said that with the current expansion, he had requested the recruitment of 132 new pilots, adding to the 1,327 existing pilots and co-pilots.
The Garuda Pilot Association (APG), meanwhile, raised its concern over the reduction of annual wage increases for pilots because of the cost-cutting strategy.
“There should be similar [efficiency measures made for management]. Employees have to face efficiency measures, but the company expanded the number of board of directors from six to nine,” said APG president Bintang Hardiono.
