Garuda hurt by global uncertainties<\/p>\n
Dadan Wijaksana
\nRendi A. Witular
\nThe Jakarta Post
\nJakarta<\/p>\n
Citing unfavorable global conditions and stiffer competition
\nat home, national carrier Garuda Indonesia's pre-tax profits in
\n2003 nose-dived by 76 percent from the previous year, it was
\nrevealed on Wednesday.<\/p>\n
Garuda President Indra Setiawan said that the company posted
\nRp 238.7 billion (about US$28 million) in pre-tax profits last
\nyear, a sharp decline from Rp 1 trillion booked a year earlier.<\/p>\n
"While domestic competition has become tougher, the reason for
\nthe decline (in profit) was mainly because of continued
\nunfavorable international conditions," Indra told legislators
\nduring a meeting with the House of Representatives Commission IX
\non financial affairs while presenting the company's unaudited
\n2003 financial performance.<\/p>\n
As the airline industry had barely recovered from the Sept. 11
\nterrorist attacks in the U.S. and war on Afghanistan in 2001 and
\n2002, it had to weather equally shocking occurrences last year.<\/p>\n
"The outbreak of SARS (Severe Acute Respiratory Syndrome) in
\nthe first semester, followed by the Iraq war in 2003 were among
\nthe main factors that had narrowed our share in the international
\nmarket," said Indra.<\/p>\n
All led to a 16 percent drop in the company's total operating
\nrevenue to Rp 8.3 trillion from Rp 9.7 trillion in 2002, mainly
\nattributable to a 16 percent fall in passenger revenue from 7.2
\ntrillion in 2002 to Rp 6 trillion last year.<\/p>\n
Another factor affecting the company's cash flow was repayment
\nof debts under its debt restructuring program that started in
\n2001 and is slated for completion in 2010, Indra said.<\/p>\n
As agreed to under the restructuring program, Garuda had paid
\noff a debt totaling $111.8 million last year, for both the
\nprincipal and interest. That leaves the company's debt as of
\nDecember last year at $928.9 million.<\/p>\n
Garuda embarked on a massive debt restructuring program in
\n2001 to get out of a debt trap -- resulting from years of what
\nwas deemed as inefficient operation.<\/p>\n
As for 2004, provided there are no other external shocks and
\nwith a number of network innovations, Indra described the
\nprospects as fair.<\/p>\n
Corporate spokesman Pudjobroto shared the same optimism.
\n"While we're planning to add a number of flights to certain areas
\nsuch as Beijing, Guang Zho, Ho Chi Min, Hanoi and others, we're
\nalso studying the possibility of opening new routes probably in
\nthe Middle East, or other cities in China," Pudjobroto said.<\/p>\n
Wednesday's hearing came amid plans by the Office of the State
\nMinister of State Enterprises, which represents the government as
\nGaruda's shareholders, to shake up the company's board of
\ndirectors.<\/p>\n
State Minister for State Enterprises Laksamana Sukardi pledged
\nthe selection process would be transparent and accountable.<\/p>\n
"There won't be any KKN (collision, corruption, nepotism). I
\ndon't know where those allegations have come from," he said,
\nadding that the fact that he is a politician may have made him an
\neasy target of criticism from the opposition.<\/p>\n
Laksamana is a top official of the ruling Indonesian
\nDemocratic Party of Struggle.<\/p>\n
Allegations of KKN are on the rise, as one of the candidates
\nto fill Garuda's top spot turns out to be Samudra Sukardi --
\nLaksamana's brother -- a career professional who is the president
\nof one of Garuda's subsidiaries.<\/p>\n
Other candidates include; Erry Firmansyah, former president of
\nthe Jakarta Stock Exchange and Erwin Rasyid, vice president of
\nBank Negara Indonesia.<\/p>",
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