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ational flag carrier Garuda Indonesia is considering asking for additional capital from the airline'€™s shareholders to improve the company'€™s financial structure which has weakened due to its aggressive expansion.

Garuda finance director Handrito Hardjono said several major expansions carried out by the company in the past few years had inevitably squeezed its capital.

'€œWe still have sufficient funds until the end of the year, but if we continue to go on in a similarly expansive pace, we will have to ask shareholders to inject additional capital next year,'€ he said during a media briefing on Friday.

The tight state of Garuda'€™s finances is reflected by its high debt-to-equity ratio (DER). With US$2.05 billion in total liabilities and $1.28 billion in shareholder equity at the end of June, Garuda'€™s DER is 1.6, which is relatively high.

Currently the government controls a majority stake in Garuda with 60.5 percent, followed by Credit Suisse AG Singapore TC AR CL PT Trans Airways '€” a group of companies '€” with 24.6 percent and other minority shareholders holding the remaining 14.9 percent.

Tycoon Chairul Tanjung, who is the coordinating economic minister, is one of the shareholders through Trans Airways.

The additional capital may be generated from the issuance of new shares or the sale of non-productive assets among other things, according to Handrito. '€œBut we have not officially informed the shareholders about this and we have not come up with a specific amount [of requested capital]'€, he added.

Garuda president director Emirsyah Satar, whose term ends later this year, said that continuous expansion was needed, even though the company had been in the red for the past two quarters.

'€œThe market is growing and we need to expand to serve more customers,'€ he said, dismissing concerns that he would leave a poor financial legacy for the airline.

Emirsyah insisted that time lags and the economic situation prevented the airline from immediately generating returns from its investments. '€œWe usually need 18 to 24 months to generate returns, but it also depends on the market,'€ he said.

Its financial reports reveal that Garuda recorded $163.85 million in net losses in the first three months of this year and the figure climbed $47.88 million in the second quarter, amounting to net losses of $211.73 million for the first half of 2014.

It also suffered a huge setback last year, when its net profits dropped 90 percent to $11.04 million.

Garuda has often attributed the decline to soaring fuel costs and the weaker rupiah. According to Handrito, every Rp 100 depreciation in the currency squeezes its operating profits by $10 million to $12 million every year.

However, it has maintained its plan to purchase a total of 83 aircraft between 2013 and 2015 to bring its total fleet to 189 in 2015.

By then, it expects to be able to achieve 63.5 billion in available seat kilometers, which is the measurement of an airline'€™s passenger-carrying capacity.

Garuda'€™s shares, traded under the '€œGIAA'€ code on the Indonesian Stock Exchange, closed at Rp 419 on Friday, down 0.2 percent from a day before.

'€”JP/Tassia Sipahutar