Garuda continues IPO plan despite revenue snag<\/p>\n
JAKARTA (JP): State-owned flag carrier Garuda Indonesia is
\ncontinuing to restructure in a bid to qualify for public listing
\neven though it did not meet its revenue targets in the first
\nquarter this year, it said yesterday.<\/p>\n
Garuda's president, Soepandi, said in a hearing with House of
\nRepresentatives members here that passenger- and cargo-services
\nrevenue increased 0.5 percent and 14.9 percent respectively over
\nthe same period in 1996.<\/p>\n
But he refused to elaborate.<\/p>\n
"Garuda gained Rp 124.65 billion in profit last year after a
\ntotal loss of Rp 204.01 billion in 1995," he said, adding that it
\nstill expected a Rp 308.28 billion profit this year.<\/p>\n
The airline is restructuring its marketing, operations and
\norganization to revitalize its business. The government has
\ninjected Rp 1.7 trillion in new funds in the company to improve
\nits financial performance.<\/p>\n
Garuda originally posted a Rp 88 billion loss in 1996, but it
\nsold assets -- including spare parts for DC-9 and F-28 aircraft
\nwhich it no longer used -- valued at about Rp 212 billion. As the
\nproceeds were included as revenue, Garuda claimed a profit of Rp
\n124.65 billion last year.<\/p>\n
Soepandi said Garuda was preparing to become a world class
\ncarrier. "This year is the test."<\/p>\n
He said Garuda planned more alliances with foreign carriers to
\nwin global aviation business.<\/p>\n
"We also plan to accept private capital placement as part of
\nthe public offering," he said.<\/p>\n
Aviation industry sources believe Garuda has offered up to 25
\npercent of its shares to foreign airlines including the
\nNetherlands' KLM, Britain's British Airways and Germany's
\nLufthansa.<\/p>\n
Soepandi said yesterday Garuda would sell its hotel subsidiary
\nAerowisata as part of its financial restructuring.<\/p>\n
"We are currently in the process of due diligence (checking
\nquality of assets and liabilities)," he said.<\/p>\n
Aerowisata owns and manages three hotels, one each in Bandung
\n(West Java), Lombok (West Nusa Tenggara) and Sanur (Bali).<\/p>\n
The company has just terminated management contracts with
\nstar-rated hotels including the Nusa Dua Beach (Nusa Dua, Bali),
\nBiak Marauw (Biak, Irian Jaya), Pusako (Bukittinggi, West
\nSumatra) and Biliton (Belitung, South Sumatra).<\/p>\n
Merpati<\/p>\n
Merpati Nusantara Airlines reported in the same hearing
\nyesterday that it had posted a total loss of Rp 137.1 billion
\nlast year.<\/p>\n
"We also posted a Rp 38.4 billion loss in the first quarter
\nthis year," Merpati's president Budiarto Subroto told the House.<\/p>\n
Merpati, which has just been separated from Garuda, faces a
\ntough battle as it is known as a regional carrier that serves
\nmostly domestic feeder routes and limited regional routes.<\/p>\n
Unprofitable routes and gross inefficiency have hurt Merpati
\nbecause its fleet includes a wide variety of airplanes. The
\ncompany is also burdened with Rp 600 billion in debts which it
\nnow expects to be converted into government equity shares.<\/p>\n
"Merpati plys more than 300 routes, 11.5 percent are 'fat
\nroutes', 14.3 percent 'middle routes' and 74.3 percent 'pioneer
\nroutes'", Budiarto said.<\/p>\n
The term pioneer route, or thin route, is used to describe
\nlow-traffic low-profit routes.<\/p>\n
Budiarto said the government should review airfares, not just
\non thin routes.<\/p>\n
"Even on routes where Merpati enjoys a full load-factor the
\noperating costs are very high," he said. The Denpasar-Ampenan and
\nJakarta-Bandung are among its unprofitable routes, he said.<\/p>\n
Merpati carried 4.7 million of the about 13.5 million domestic
\nair passengers in 1996. (icn)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/garuda-continues-ipo-plan-despite-revenue-snag-1447893297",
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