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Garuda gains profits on restructuring schemes
National flag carrier Garuda Indonesia recorded higher profits last year thanks in part to a series of strategic restructuring schemes to compensate declining revenues
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ational flag carrier Garuda Indonesia recorded higher profits last year thanks in part to a series of strategic restructuring schemes to compensate declining revenues.
The publicly listed company booked a net profit of US$76.48 million last year, a 120.67 percent jump year-on-year (yoy) compared to $370.05 million of loss recorded in the previous year.
Its total operational costs dropped 13.05 percent yoy to $3.73 billion, from $4.29 billion in 2014, while its revenues slightly contracted 3.05 percent yoy to $3.81 billion.
'We carried out strategic restructuring measures from our upstream business to the downstream,' said Garuda Indonesia president director Arif Wibowo on the sidelines of the Singapore Airshow on Tuesday.
He added that the measures included network restructuring, strengthening the performance of the firm's subsidiaries, air crew rotation, cost efficiency and optimization.
Garuda Indonesia restructured its network by deploying flights for suitable routes and markets, Arif said. The company was also able to lower its financial costs by reprofiling its loans, which helped cut the cost of funds, he added.
According to the company's annual financial report published by the Indonesia Stock Exchange (IDX), all operational cost components were recorded lower than that of in 2014. Flight operational costs decreased 14.45 percent yoy to $2.19 billion from $2.56 billion. Its maintenance and service costs stood 10.26 percent lower yoy at $376.5 million last year.
'We also strengthened our subsidiaries so they could gain profits,' Arif said.
Garuda Indonesia owns dozens of subsidiaries, including low-cost carrier Citilink, Garuda Maintenance Facility (GMF) AeroAsia and several travel agents, ticketing and aircraft rental service companies in Indonesia, France, South Korea, Japan and Australia.
Arif said the subsidiaries contributed around $38 million in profits last year, with Citilink chipping in approximately $5 million.
Separately, Garuda Indonesia financial director IGN Askhara Danadiputra wrote in a text message from Hong Kong that the weakening value of the rupiah by 12.1 percent against the US dollar affected his firm's revenues last year even though more passengers were carried.
As many as 23.5 million passengers were transported by Garuda Indonesia last year, up 9.3 percent from 21.5 million in 2014.
Askhara blamed several environmental disasters, such as forest fires and volcanic eruptions, which also forced Garuda to cancel its flights.
As part of Garuda's fleet revitalization program, the airline is reportedly set to receive 16 new aircraft throughout the year, consisting of the one Boeing 777-300ER, four Airbus A330-300s, four ATR72-600s and eight Airbus A320s to be operated by Citilink.
By the end of 2016, Garuda Indonesia expects to operate 188 aircraft; 144 aircraft by Garuda Indonesia and 44 aircraft by Citilink.
Meanwhile, Arif said that his company would expand its international market this year, started by strengthening its existing routes in European cities, including to London and Amsterdam.
To support the expansion, Garuda Indonesia will add five wide-body planes and eight narrow-body, funds for which would be sourced from its capital expenditure of $160 million and financing of up to $300 million this year.
'We hope this can recover our flights to Europe,' he said.
