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Jakarta Post

‘It affects our revenue’: Garuda Indonesia suspends more flights as coronavirus spreads

  • Riza Roidila Mufti
    Riza Roidila Mufti

    The Jakarta Post

Jakarta   /   Fri, February 28, 2020   /   06:31 pm
‘It affects our revenue’: Garuda Indonesia suspends more flights as coronavirus spreads A Garuda Indonesia airplane. (Shutterstock.com/e X p o s e)

National flag carrier Garuda Indonesia announced it expects its financial performance would be adversely affected by the global COVID-19 outbreak as it cancels more flights because countries around the world are struggling to limit the movement of people to contain the virus.

The airline has been forced to cut flights to and from China and reduce the number to several other destinations, such as Singapore and Hong Kong.

On Thursday, Garuda's top executive said the airline was forced to halt even more after the Saudi government imposed a temporary ban on all umrah (minor haj) by foreigners because of the spread of the pneumonia-like illness. 

“It is inevitable that the [COVID-19] coronavirus outbreak would affect our revenue significantly,” Garuda president director Irfan Setiaputra told a press conference in Jakarta on Thursday. The Saudi travel ban has worsened the situation, he added, since the airline operated four daily flights to Mecca with wide-body aircraft. 

“However, we have yet to calculate the exact amount of the loss,” he said.

Garuda Indonesia’s stocks, traded with the code GIAA on the Indonesia Stock Exchange, dropped by 5.63 percent following the statement. The stocks went further down by another 8.2 percent on Friday afternoon even as the bourse's main gauge, the Jakarta Composite Index, plunged 3.47 percent.

The airline booked US$122.8 million in profits from January to September last year as its revenues jumped by 10 percent annually to $3.54 billion. Its total liabilities were worth $3.5 billion as of September, a slight increase from the $3.4 billion in the corresponding period of 2018.

The COVID-19 outbreak, which according to Johns Hopkins Center for Systems Science and Engineering has infected more than 83,500 people worldwide and killed more than 2,800 as of Friday, has prompted several countries to impose travel bans or warnings in an effort to contain it.

Indonesia’s tourism industry is expected to be hit hard as Chinese tourists were the second largest group of foreign visitors to the country last year.

The government announced on Tuesday a stimulus package worth Rp 10.3 trillion ($742 million) to boost consumer spending and boost the tourism industry. Of that amount, about Rp 298.5 billion is to be channeled into incentives for airlines and travel agents to attract foreigners to Indonesia and another Rp 443.39 billion into discounts for domestic tourists visiting various attractions.

“Hopefully, this one shall pass quickly, so we can recover fast,” Irfan said. 

Garuda Indonesia has stopped a total of 40 weekly flights from and to China and suspended its Denpasar-Hong Kong route, operating flights to and from Hong Kong from Jakarta. It has also reduced the frequency of flights between Jakarta and Singapore from 10 per day to only three. 

To cope up with the situation, Garuda wants to open new routes to replace the temporarily closed ones, such as by linking Denpasar with Brisbane, New Delhi, Kuala Lumpur and Bangkok.

Garuda is not alone. Several international airlines, such as British Airways, American Airlines, AirAsia and Cathay Pacific, have also suspended or reduced flights because of travel bans and falling demand.  

“This would potentially hit Garuda's financial report this year,” Binaartha Sekuritas analyst Nafan Aji said on Thursday. “At times like this, government stimulus for the tourism and aviation sectors is very important to boost the industries and keep them surviving.” 

He expected the airline to implement strategic measures, such as cost efficiency and revenue maximization from other potential flights or new routes, to survive this situation.

 


If you want to help in the fight against COVID-19, we have compiled an up-to-date list of community initiatives designed to aid medical workers and low-income people in this article. Link: [UPDATED] Anti-COVID-19 initiatives: Helping Indonesia fight the outbreak