The Jakarta Post
Publicly listed national flag carrier Garuda Indonesia is canceling this year's plans to open two new international routes ' Jakarta'Manila and Jakarta'Mumbai ' as the company suffered from increasing losses during the first half of this year, a Garuda senior executive said.
As previously reported, the state-owned enterprise recorded a loss of US$211 million from January to June, almost 20 times greater than a $10.92 million loss booked in the same period last year.
According to Garuda's vice president for communications Pujobroto, the airline is forced to take efficiency measures to cope with rising costs that had put pressure on the firm's expansion plans.
With a weaker rupiah and an increase in fuel prices, Garuda had to cope with increasing operational costs, of which 40 percent was used to pay for fuel, he said.
The firm's financial report released last week showed that Garuda's revenue rose 0.7 percent to $1.74 billion this half, while its expenses, which include flight operations, climbed 15 percent to $1.96 billion.
During the first half of this year, the airline booked $12.86 million in losses from currency exchange, while in the same period last year the firm was still posting profits of $1.4 million from it.
'With the current conditions, we have to cancel our plan to open a new route to Mumbai, India this year, as well as the plan to open to new route to the Philippines,' Pujobroto said in a recent media briefing.
The airline had previously planned to open the new routes during the second half of this year.
As part of its efficiency campaign, the country's flag carrier also planned to close its less profitable routes, including Jakarta-Taipei, starting in Aug. 10 this year, Pujobroto said.
In anticipating the downturn, the airline will also reduce the company's capital expenditure by $54 million this year, as well as temporarily cease the operation of its more fuel-intensive aircraft and delay the arrival of new aircraft it has ordered.
Garuda currently operates a total of 149 aircraft, including Boeing 777-300ERs, Airbus A330-200/300s, Boeing 737-800NGs, Bombardier CRJ 1000 NextGens and ATR 72-600s, that have an average age of five years.
'By joining SkyTeam earlier this year, Garuda has improved its connectivity,' he said.
'Therefore, even though we have a plan to close the Taipei route we will sign a code share agreement with China Airlines [a member of SkyTeam], so we can still fly our passengers from Jakarta to Taipei,' he added, explaining that the daily route's load factor was only around 50 to 60 percent.
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