Garuda Indonesia eyes return to stability this year
Garuda Indonesia eyes return to stability this year
SINGAPORE (Agencies): Indonesia's debt-ridden state airline Garuda Indonesia is on target to meet its US$30 million profit target for 1999 and expects business to return to normal after this year's elections, an executive said on Wednesday.
"The first three months were quite good and we are already in the target frame," Walter Prenzler, an executive vice president at Garuda, told a news conference.
"We have already budgeted a figure of $30 million profit for 1999. We are confident of that," he said.
Garuda made a loss of about 400 billion rupiah ($46.6 million) in 1998.
Prenzler, in Singapore with Indonesia's delegation to the Pacific Asia Travel Association trade show, said Garuda's seat load factor was "in the range of 68 percent" in the first quarter of 1999, and that the airline was hopeful it could see annual passenger levels at about seven million in three to four years.
Garuda's passenger numbers slumped to 4.1 million in 1998 from about seven million in 1997 as Indonesia's economic crisis seized the airline, forcing it to slash routes and reduce its fleet size.
Garuda Indonesia now has a fleet of 40 aircraft with an average age of seven years, and flies to 21 international and 20 domestic destinations.
Most of the airline's revenues are in rupiah, which has lost about 72 percent in value against the U.S. dollar since July 1997.
But the carrier had been performing much better since September, said Prenzler, after he and five other executives from Germany's Lufthansa AG were appointed on a management contract to help turn around the stricken airline.
Deutsche Bank was also employed by the airline to restructure its debt.
Prenzler said those efforts were progressing.
"Garuda's foreign debt is in the range of $1 billion...We are holding meetings with creditors and things are under control," he said.
The Lufthansa management contract was scheduled to run until the end of 2000. Its objective was to turn the airline into a competitive, profitable operation by its completion.
The contract could be extended by mutual agreement.
Prenzler said Garuda's fortunes would improve after Indonesia's parliamentary and presidential elections this year.
"After the elections we will have stability and then we can go back to normal business," he said.
He said Garuda could consider reinstating some of the routes it had closed and add new destinations to its schedule next year.
There was even the possibility of a code-sharing agreement with an as yet unidentified partner to restore its Jakarta-Los Angeles route, Prenzler said.
"But that is more of a strategy for next year," he cautioned.
Garuda Indonesia plans to submit a business plan to its main creditors in June as part of its efforts to restructure total debt of $1.08 billion, its president Abdulgani said in Jakarta last week.