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Analysts see no problem with Garuda Indonesia's financial report
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Low-cost air carrier Citilink Indonesia has stated that its recently launched inflight Wi-Fi service will not have any impact on ticket prices. (Shutterstock/Andrey_Popov)
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Garuda Indonesia financial report that was objected to by two commissioners is acceptable, analysts have said, arguing that the inclusion of receivables in a report is common practice in accountancy.
Commissioners Chairal Tanjung and Dony Oskaria previously objected to the flag carrier's financial report, particularly details on the revenue from a cooperation agreement with PT Mahata Aero Teknologi (US$239.94 million) and receivables from PT Sriwijaya Air ($28 million) in the 2018 fiscal year.
Chairal represents PT Trans Airways, while Dony represents Finegold Resources Ltd, both of which control 28.08 percent of Garuda Indonesia shares. As a result of their protest, the price of Garuda shares dropped 7.6 percent on Thursday.
“There is no problem as long as it [the inclusion of receivables] is in line with the agreement note,” said Lee Young Jun, an analyst with security firm Mirae Aset Sekuritas, as quoted by kontan.co.id on Thursday, adding that the receivables could be included in the report because the report was not based on cash.
Under the agreement note between PT Mahata Aero Teknologi and Garuda Indonesia, both parties agreed on the payment of compensation for the installation of connectivity infrastructure on planes owned by low-cost carrier Citilink Indonesia, a Garuda subsidiary.
“For me if the cooperation is based on a contract, there is no problem from an accountancy point of view,” he added.
Suria Dharma, research head of Samuel Sekuritas, questioned the reason of the protest by the two commissioners, saying that a good performance of Garuda Indonesia as shown in the report had benefited the shareholders because it could increase share prices.
“I see the protest was a bit odd [...] Why should the shareholders speak out in the open forum? Why did they not discuss it internally? It had caused Garuda’s share price to drop by 7.6 percent. It is bad for Garuda’s credibility,” Suria added.
