Garuda sees continuing trend in rising losses

Teetering on the brink of bankruptcy, national flag carrier Garuda Indonesia saw a continued trend in operational losses in the first five months of the year, reaching a total of Rp 445 billion.

State Minister for State Enterprises Sugiharto said before legislators that the airline's operational losses rose each month, starting from Rp 20.6 billion in January, Rp 65.9 billion in February, Rp 100 billion in March and Rp 131.8 billion in May.

The losses were caused by soaring fuel prices and tough competition, especially with the rapidly growing low cost carriers in the domestic market.

Garuda's president director Emirsyah Satar said fuel costs had risen from 38 U.S. cents per liter in January to 49 cents per liter in May.

"Each 1 cent increase will bring an additional cost of $9 million per year," he added.

Garuda booked an audited net loss of Rp 861.21 billion last year. As of March, the company's total debts stood at some $826.5 million.

"We are already starting negotiations for a rescheduling with ECA," Emirsyah said, referring to Garuda's largest group creditor, the European Credit Agencies, to which the airline owes more than $500 million. -- JP