National flag carrier Garuda Indonesia has booked US$1.07 billion in losses as of September, a reversal from the $122.4 million profit it saw in the same period last year, as the aviation industry has yet to rebound from the impacts of the ongoing health crisis.
The financial loss came after Garuda’s revenue plunged 67.8 percent year-on-year (yoy) to $1.13 billion in the first nine months of the year, according to the company’s financial report.
Jasa Utama Capital analyst Chris Apriliony told The Jakarta Post on Monday that Garuda’s recorded loss fit the analysts’ prediction, as the country’s airlines are still struggling to market their tickets to consumers.
“The company’s loss aligns with our prediction because we see that Garuda is struggling to sell seats, which affects its balance sheet,” he said in a phone interview.
The Garuda Indonesia Group, which consists of full-service airline Garuda Indonesia and low-cost carrier Citilink, suffered a 65.6 percent nosedive in passenger numbers to 8 million passengers in the January-September period, from 23.3 million passengers in the same months last year. The seat load factor, meanwhile, has dropped by 23.1 percentage points yoy to 49.8 percent as of September.
The ongoing pandemic has hit the aviation industry hard, with people canceling their travel plans because of border closures and health restrictions.
The government, through the Transportation Ministry, has been trying to boost air passenger numbers by providing passenger service charge (PSC) exemptions worth Rp175.7 billion (US$12.29 million) as part of its Rp 216.5 billion aviation industry stimulus package introduced earlier in October.
The PSC is included in the price of a ticket, so an exemption would lower the airfare. The exemption is available for flights booked between Oct. 23 and Oct. 31 with scheduled departures before midnight of Jan. 1, 2021.
State-owned airport operator Angkasa Pura (AP) I recorded a 16.9 percent month-to-month (mtm) passengers increase in October, following the start of the stimulus program.
While the stimulus could provide a much-needed passenger boost, Chris said the program would only lead to incremental growth for Garuda’s financial performance, as the company had always enjoyed various government subsidies.
The latest government intervention includes an Rp 8.5 trillion capital injection through a mandatory convertible bond (MCB) scheme in July.
In order to prevent further losses, Chris said Garuda should be focusing on its main business line of scheduled flights and cut off some of its underperforming subsidiaries.
“I hope the company can put all of their efforts in their main business line of scheduled flights to push down operational costs and improve profit,” he said.
According to the company’s financial report, Garuda has direct ownership of six subsidiary companies, including travel agent Garuda Indonesia Holiday France S.A.S in Paris and tourism company PT Aero Wisata.
However, Chris projected that Garuda would post a better result in the fourth quarter this year, as well as in 2021, as demand for domestic travel has steadily increased in the last several months.
“We may see better quarterly results by December as the general public has started to lose their [fear] of the pandemic, which may increase demand for travel. We could see an increase in demand for domestic flights moving forward,” he said.
Garuda Indonesia saw a 17.9 percent mtm increase in passenger numbers in September this year at around 233,300 people.
Garuda president director Irfan Setiaputra projects that the company’s financial performance will improve in this year’s last quarter.
“Based on our latest performance, we believe that our recovery efforts are on the right track. We are optimistic that we will see further growth in the next three months of the year, especially during the holiday season,” he said in a statement on Friday.
Garuda’s shares, traded on the Indonesia Stock Exchange (IDX) under the code GIAA, increased by 10.85 percent on Tuesday at 1.34 p.m. Jakarta time, as the main gauge, the Jakarta Composite Index (JCI), rose by 1.59 percent. The stock has lost 42.97 percent of its value so far this year.