Garuda Indonesia may not meet target for reducing losses
Garuda Indonesia may not meet target for reducing losses
Arijit Ghosh, Bloomberg/Jakarta
PT Garuda Indonesia, the nation's biggest airline, may not meet
its target to cut losses by 50 percent this year after bookings
slowed amid rising fuel costs following the Oct. 1 suicide
bombings in Bali.
The Jakarta-based airline may report a loss of as much as
US$70 million in 2005 higher than its previous estimate of about
$40 million, President Emirsyah Satar said. The company posted a
net loss of Rp 811.3 billion ($82 million) last year, the first
time in three years.
Indonesia's revenue from tourists may decline 5.7 percent this
year to $4.5 billion, the nation's tourism ministry said on
Thursday because of the Oct. 1 suicide bombings in Bali, the
spread of avian influenza in the country and last year's tsunami.
Fewer ticket sales combined with higher fuel costs are likely to
affect the company's targets.
"Our target was to reduce the losses, before the Bali bombings
we were quite positive to cut it by half now our target is still
to reduce" it though not as drastically," Satar said.
On Oct. 1, three suicide bombers killed themselves and 20
people on Bali. The attack was the worst terrorist incident in
Indonesia since a bombing last year outside the Australian
Embassy in Jakarta, which killed at least nine people.
Air Paradise International Pte, an Indonesian airline flying
between Bali and Australian cities, on Nov. 23 suspended all
services as demand fell after the bombings.
Garuda's plans to delay paying up to $515 million of debt may
also take "quite some time," because its creditors are yet to
approve the proposal, Satar said.
"We haven't got any response" from the creditors yet.
The carrier is waiting for approval from creditors to delay a
$50 million principal payment of $150 million floating-rate notes
due by the end of this month, Satar said on Dec. 7.
The company has hired PT Danareksa and NM Rothschild & Sons
Ltd. to help revamp its debt.
The bid to reschedule debt payments is an effort by
government-owned Garuda, which fired its entire management board
in March, to improve its management and be profitable.
Garuda, named after a mythical bird that carries the Hindu god
Vishnu, needs $115 million a year to repay more than $800 million
of debt and about $1 billion more for wages, jet fuel,
maintenance and other costs, according to its annual report.
To protect Garuda and two other state-owned airlines,
Indonesia's government banned more overseas discount carriers
from landing in Jakarta and other cities, including Medan,
Surabaya and Denpasar.
Indonesia, with 18,000 islands and a population of 238 million
people, has 26 airports and at least 18 airlines.