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