Garuda may book first losses since '98<\/p>\n
Rendi A. Witular, The Jakarta Post, Jakarta<\/p>\n
For the first time since the crisis, national flag-carrier Garuda
\nIndonesia may have suffered losses as a result of higher fuel
\nprices and stiffer industry competition in 2004.<\/p>\n
Garuda strategic, planning and finance director Wiradharma B.
\nOka said on Wednesday the airline's 2004 revenue -- projected to
\nbe higher than in 2003 -- would be insufficient to cover the
\nsoaring price of fuel.<\/p>\n
\"Like most airlines in the domestic and regional markets,
\nGaruda is likely to record losses in 2004 ... We are not able to
\nannounce the exact figure yet, but it is estimated to reach
\nbillions of rupiah,\" said Oka.<\/p>\n
He added that the official figure would be released sometime
\nnext month.<\/p>\n
Garuda recorded a projected 2004 revenue of about Rp 10
\ntrillion (US$1.1 billion), a 20 percent increase from Rp 8.3
\ntrillion in 2003. The rise was attributed mostly to a higher
\npassenger load of about eight million, up from seven million in
\n2003.<\/p>\n
However, with the airline having to spend an additional Rp 700
\nbillion or so on fuel costs last year, its financial balance
\nwould likely head into the red, Oka said.<\/p>\n
Garuda had set a fuel price ceiling of about $35 per barrel
\nfor 2004, below the actual average of $38 per barrel. The price
\nhad risen to as high as $54 a barrel during the year.<\/p>\n
Fuel makes up about 30 percent of the airline's operational
\ncosts.<\/p>\n
Another cause of losses was tougher competition in the
\nindustry, with a surge in new airlines that has driven down
\nticket prices. Many of the upstart carriers are offering local
\nand international routes at lower prices than Garuda.<\/p>\n
\"We have had to lower our ticket prices to compete with them,
\nwhich has pushed back our profit margin even further,\" said Oka.<\/p>\n
Despite the loss in revenue, Oka was upbeat over Garuda's
\nprospects for 2005 due to a speedier pace of economic recovery:
\nThe airline projects a 15 percent growth in revenue and 10
\npercent increase in passenger load.<\/p>\n
With regard to repaying Rp. 1.3 trillion in mandatory
\nconvertible bonds (MCB), which will mature in 2006, Oka said
\nthere was a possibility that bond holders would convert the MCB
\ninto equity.<\/p>\n
The bond holders are state-owned Bank Mandiri and airport
\noperators PT Angkasa Pura I and PT Angkasa Pura II.<\/p>\n
Garuda nearly went bankrupt in 1998 because of the Asian
\nfinancial crisis, which caused the rupiah to depreciate steeply,
\nand a massive debt accumulated from years of inefficiency and
\ninternal corruption.<\/p>\n
During Soeharto's New Order regime, many government officials
\nhad allegedly used state companies as their personal cash cow.<\/p>\n
In 2001, the company underwent debt restructuring, with
\ncreditors agreeing to extend the payment period by five years
\nuntil 2010.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/garuda-may-book-first-losses-since-98-1447893297",
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