Garuda sees profits doubling this year

Garuda sees profits doubling this year

Rendi A. Witular, The Jakarta Post, Jakarta

National carrier Garuda Indonesia expects its pre-tax profits
to skyrocket by more than 100 percent this year on improved
operating efficiency and rising passenger volumes against a
background of rapidly recovering domestic and regional economies.

Garuda president Indra Setiawan said the company was targeting
a profit of Rp 500 billion (US$58.8 million) this year, up from
Rp 238.7 billion last year.

Operating revenue is projected to increase to Rp 11 trillion
from Rp 8.3 trillion.

"We expect our profit to surge this year on the back of
greater efficiency and optimism over the country's and the
region's economies," said Indra on the sidelines of a seminar on
state-owned enterprises on Wednesday.

Indra explained that Garuda would have enjoyed an equally
strong profit increase last year were it not for the outbreak of
SARS (severe acute respiratory syndrome) and the Iraq war.

He said that in order to further boost profits, Garuda planned
to add a number of new planes to its fleet to strengthen the
domestic routes connected by its "Citilink" services so that it
could compete with the increasing number of low-cost airlines.

The company was also planning to strengthen its regional
routes, such as from Indonesia to China, Malaysia and Singapore.

The company has already leased two extra aircraft and plans to
lease between another eight and 13 planes this year to support
its domestic and regional operations.

The company plans to operate three aircraft types -- the
Boeing 737 series for short-haul flights, DC10-30s and Airbus
330-300s for medium-haul flights and Boeing 747-200s and Boeing
747-400s for long-haul flights.

Garuda's current fleet comprises 54 aircraft serving 21
domestic and 22 international destinations.

Regarding the impact of the general election on the company's
business, Indra said that there had been slight decline in
passengers from the domestic and international tourist categories
as they were reluctant to travel out of fear of violence during
the election period.

However, this decline would be compensated for by an
increasing number of politicians, legislative candidates, and
party votegetters and supporters traveling by air for campaigning
purposes, he said.

The surge in profits is expected to help the company repay its
huge dollar-denominated debts, which as of December last year
totaled $928.9 million.

Indra said that this year the company was planning to repay
$115 million of this debts, with the funds being taken from
internal cash.

As agreed under its restructuring program, Garuda paid off
debts totaling $111.8 million last year, including both principal
and interest.

Garuda embarked on a massive debt restructuring program in
2001 to get out of its debt trap, which resulted from years of
inefficient operations. The debt restructuring program is slated
to be completed in 2010.

The government, as the company's shareholder, is expected to
announce a new board of directors for Garuda next month after the
terms of the current directors ended in July last year.

Allegations of collusion are on the rise, however, as one of
the strongly tipped candidates to fill the Garuda top spot turns
out to be Samudra Sukardi, the brother of State Minister for
State Enterprises Laksamana Sukardi. Laksamana's office is
currently in the process of selecting the candidates.

Samudra is president of a Garuda subsidiary.