The Jakarta Post
National flag carrier Garuda Indonesia is optimistic that it will book profit this year despite a change in asset value following the termination of its cooperation with private airline Sriwijaya Air Group.
Garuda acting president director Fuad Rizal said on Friday that he expected the company’s asset value to decrease from that stated in its financial statement for this year's first nine months.
“Our nine months financial statement is being audited by PricewaterhouseCooper [PwC] and there could be an impairment on the management fee from Sriwijaya,” he said during a press briefing in Tangerang, Banten.
The airline removed its logo from Sriwijaya airplanes following a dispute over their operational cooperation and management partnership in September. Although both parties initially agreed to resolve the issues, the two airlines eventually terminated the partnership in November.
The impairment, Fuad continued, would affect the company’s profit in the period of January to September this year, as well as its 2019 full-year financial statement.
He, however, declined to go into detail about the company's expected profit as the audit was ongoing.
The company announced earlier this year that it aimed to book US$70 million in profit this year after recording a loss of $175 million in its restated 2018 financial report.
Garuda pocketed $122.8 million in profit in the first nine months of this year as its revenue rose 10 percent year-on-year (yoy) to $3.54 billion during the period.
Fuad said the company would focus on improving its efficiency to increase profitability in the long term.
“We’ll continue our effort to reduce fuel usage by improving efficiency on each of our flights,” he said.
Another efficiency effort includes extending the company’s aircraft lease agreements before their termination dates to reduce rental fees by 25 to 30 percent, he said.
The airline is also working to reduce its short-term debts by raising $900 million to refinance its $500 million sukuk maturing in June 2020. The remaining amount will be used as working capital.
The Financial Services Authority (OJ)K and the Indonesia Stock Exchange (IDX) previously ordered Garuda Indonesia to restate its 2018 financial report after a joint investigation by the Finance Ministry and the OJK concluded that the airline had published information that did not comply with accounting standards in the financial report.
The airline's book recorded a loss of $175.02 million in 2018, in contrast to a net profit of $5.01 million reported in the controversial balance sheet issued earlier.