Garuda suffers Rp 139b operational loss in Q1

The Jakarta Post, Jakarta

Citing soaring fuel expenses and tougher competition in the industry, national flag carrier Garuda Indonesia reported on Friday a whopping first quarter operational loss, almost twice the amount posted in the same period a year earlier.

"This year's first quarter operational loss is bigger than last year's. Until March, we have posted Rp 139 billion (some US$14.5 million) in operational losses, as compared to about Rp 74 billion in the same period last year," Emirsyah Satar, Garuda's new chief executive officer, said on Friday.

Last year, the company recorded a full-year operational loss of Rp 618 billion, or an average loss of Rp 1.6 billion per day, as compared with an operating profit of Rp 2.8 billion in the previous year.

To compensate for rising fuel costs, Garuda, which flies to 33 overseas destinations and 27 domestic cities, will soon raise the fuel surcharge, especially for international destinations.

The company will impose surcharges of $25 for passengers flying from Indonesia to Australia, while those flying to the Middle East will have to pay an additional $12.

Emirsyah, who was appointed last month to head Garuda, said that combined with sales that are projected to increase 5 percent to Rp 10.6 trillion, the airline should manage to break even this year.

"Sales reached Rp 10.1 trillion last year from Rp 8.3 trillion in 2003."

"The airline is doing everything it can to boost efficiency and return to profit. This is our goal for this year and the next four years before we go public in 2009," he said.

To manage the company's massive debt, which currently stands at $826.5 million in the form of mandatory convertible bonds, Garuda plans to discuss a possible rescheduling of as much as $522.8 million with the European Credit Agencies -- its largest group creditor.

Emirsyah said, "Every year, we have to pay $115 million for debt payments, whereas our cash flow is negative... I will meet them next week."

Garuda, which currently operates 57 planes including 26 Boeing 737-400s and 13 Boeing 737-300s, also plans to sell unprofitable units and some of its aircraft in order to cut costs. (001)