Garuda posted net loss in 2004, first in 3 years

Garuda posted net loss in 2004, first in 3 years

Arijit Ghosh and Soraya Permatasari, Bloomberg/Jakarta

PT Garuda Indonesia, the nation's biggest airline, said it posted a net loss in 2004, the first time in three years because of higher costs and surging fuel prices.

Net loss for the year ended December was Rp 811.3 billion (US$83 million), compared with Rp 2.81 billion net income in 2003, according to company documents obtained by Bloomberg News. Sales rose to Rp 10.06 trillion from Rp 8.75 trillion, the audited figures showed.

Jakarta-based Garuda and other Asian airlines have been struggling with higher costs because of surging oil prices, prompting them to impose a fuel surcharge to defray part of the additional expenses. Global carriers may pay $83 billion for fuel this year, 31 percent more than 2004, causing the industry to report a record loss of $6 billion, the International Air Transport Association, which groups 265 carriers has said.

Jet fuel rose 20 percent to $48.35 at the end of 2004 from a year earlier, according to oil-pricing service Platts. Jet fuel averaged $62.98 a barrel in Singapore in the first half of 2005, 29 percent higher than the average last year. The price of aviation fuel rose to a record $76.375 a barrel on April 4.

Fuel costs account for 30 percent to 35 percent of Garuda's total operating expenses, the state-owned company said in June.

Garuda said its costs rose to Rp 10.87 trillion last year from Rp 8.69 trillion a year earlier, the company said. The loss from its operations was Rp 804.9 billion last year, compared with an operating profit of Rp 60.3 billion a year earlier, it said.

Garuda in May increased fares by an average 10 percent on domestic flights, including that from Jakarta to Denpasar on Bali island, one of the airline's busiest routes. On June 1, it raised surcharges imposed on flights to countries in the Middle East to $25 each passenger from $12. It doubled the surcharge for flights to Beijing and Shanghai to $30 and increased the charge to Australia from $25 to $35.

The company may report an operating loss of $10 million to $20 million this year because of surging jet fuel prices, it said in May.

Garuda, whose management board was dismissed in March by the government, posted a first-quarter loss of Rp 139 billion. It earlier reported an operating loss of Rp 618 billion last year compared with a Rp 2.8 billion operating profit in 2003, without disclosing its net loss.