Garuda to suffer huge net loss of Rp400b this year
JAKARTA (JP): President of PT Garuda Indonesia Robby Djohan said on Tuesday that he expected the national flagship carrier to incur a net loss of roughly Rp 400 billion (about US$38 million) this year due to the economic crisis.
He explained that the crisis, in which the rupiah has lost about 75 percent of its value against the U.S. dollar since July last year, had slashed passenger load factor to between 40 percent and 50 percent, and boosted operating costs which were about 80 percent in the dollar.
"But we will try to minimize the loss through efficiency programs," he told reporters on the sidelines of a hearing with House of Representatives' Commission IV for transportation and communications.
He said the airline enjoyed a net profit of Rp 200 billion in August, attributing it to the peak tourist season which raised the load factor to about 85 percent.
"We expect net profit to remain high in September because of the strong load factor," he said, adding that the airline was expected to fall into the red during the remaining months of the year as load factor would drop below 50 percent.
He added that part of Garuda's efficiency efforts was a staff rationalization program, in which around half of its 12,000 employees would be encouraged to join the voluntary program with retrenchment compensation.
About 3,000 employees are expected to join the program next month.
Robby also said that Garuda had cancelled a leasing contract for six MD-11 aircrafts and three Airbus A-300 because it was deemed too expensive.
Under the initial contract signed with Garuda's leasing broker, a MD-11 aircraft cost $1.1 million per month.
Robby said he demanded $500,000 per aircraft, but the brokerage firm offered $750,000 per unit.
The airline has also cut down unprofitable international routes to save costs, or entered into joint operation agreements with leading overseas airlines including KLM, Northwest and Swiss Air.
Director General of Air Communication Soenaryo Y. admitted on Tuesday that despite the 232 percent increase in airfares between October and September, the country's five scheduled airlines were still unable to cover operating costs.
"The airlines are still in difficulties in securing enough cash to cover costs," he told the commission.
"Improving efficiency and productivity are the efforts taken by the airlines."
He said the airlines had slashed the number of their operating fleet to 90 aircraft as of September, and restructured 52 unprofitable domestic routes and 17 international ones.
He added that the industry would also seek tax consideration to compensate for the declining market share due to direct flights into the country by about 37 overseas scheduled airlines. (rei)