Garuda eyes $31m in profits this year

JAKARTA (JP): National flagship carrier Garuda Indonesia said on Tuesday it expects Rp 280 billion (US$31 million) in net profit this year, a drastic rise from the estimated Rp 400 billion net loss incurred last year.

The airline's president, Abdulgani, said the company's revenues would shrink slightly to Rp 7 trillion this year from over Rp 10 trillion in 1998 because the strengthening rupiah would lower its dollar-denominated revenues from international flights.

The company does expect to book about Rp 600 billion in operational profit, he said.

Last year, Garuda recorded Rp 10 billion in revenues, 70 percent of which came from passengers and 30 percent from cargo, but it suffered a huge net loss because of rising operating costs and fewer flights.

Garuda operates a fleet of 40 aircraft on domestic and international routes.

Pudjobroto, Garuda's spokesman, said that last year's high revenues were due to the rupiah losing ground against the U.S. dollar, increasing dollar-denominated income from international flights.

The rupiah dropped sharply against the dollar last year, reaching the Rp 16,000 level against the greenback before bouncing back to the current Rp 9,000 level.

Abdulgani said Garuda's offshore debts, totaling about $390 million, were currently being restructured by the airline's financial consultant, Deutschebank.

Garuda is also currently in the process of converting Rp 1.4 trillion of a government loan into equity in the airline, he said. (das)