Minister slams Garuda over losses

Minister slams Garuda over losses

JAKARTA (JP): Minister of Transportation Haryanto Dhanutirto
slammed yesterday state-owned air carrier Garuda Indonesia for
its recent huge losses and doubted the company would reach its
profit target of Rp 300 billion this year.

He said Garuda had become a "parasite" with total losses
reaching Rp 122.8 billion (approximately US$42.34 million) in the
first half of this year.

"We have to lower Garuda's estimated profit this year to Rp
300 billion from Rp 460 billion," Haryanto told members of the
House of Representatives in a hearing yesterday.

Haryanto saw the development as ironic as Garuda was
originally projected to be one of the most profitable companies
under his ministry's supervision.

"Garuda must realize this situation and I would like to
support the national flag carrier in its efforts to recover," he
added.

He did not say how or why Garuda suffered such big losses.

"The government has injected $754 million to improve the
company's financial performance. It's not a small amount, but
Garuda still suffered losses due to its inability to control its
high costs," the minister said.

The airline also suffered an operational loss of Rp 87.44
billion last year, as against total losses of Rp 342 billion in
1995. But Rp 212.09 billion in revenue from assets (aircraft and
spare parts sales) improved its bottom line last year with a
profit of Rp 124.65 billion.

Garuda's president, Soepandi, who failed to appear at
yesterday's hearing, said earlier that losses last year and in
previous years were caused mostly by rising fuel prices and jet
overhaul costs.

Haryanto reiterated yesterday that Garuda had to focus on its
core business and shed some of its subsidiaries.

Merpati

The airline has subsidiaries and affiliated firms which
operate hotels, catering, travel and transportation services.
Garuda is currently in the process of selling two hotels in
Lombok, West Nusa Tenggara, and Sanur, Bali, which are owned and
run by its subsidiary PT Aerowisata.

While criticizing Garuda, Haryanto said that money-losing
Merpati Nusantara Airlines was expected to break even this year
after splitting away from Garuda last April.

Nonetheless, he said yesterday the company still posted a loss
of Rp 40.86 billion in the first half this year.

Merpati has been hurt by a number of unprofitable routes as
well as inefficiency due to its wide range of aircraft types.

Merpati's losses dropped slightly to Rp 130 billion in 1996
from Rp 133 billion in 1995. The company is also burdened with
some Rp 600 billion in debts which it expects to be converted
into new government equity shares.

Haryanto said yesterday that in addition to Garuda and
Merpati, there were four other firms under his office's
supervision which suffered losses in the January to June period
this year.

He said public city bus operator Perum PPD suffered a Rp 7.15
billion loss, PT Varuna Tirta Prakasya Rp 322 million, PT
Djakarta Lloyd Rp 1.85 billion and dredging company PT Pengerukan
Indonesia Rp 1.4 billion.

"The combined profits of the 18 state transportation
enterprises reached Rp 173.27 billion in the first half of 1997,
much lower than Rp 492.73 billion originally targeted by the
government," he said.

He estimated their total profit for the whole year at Rp 1.08
trillion, up from Rp 807 billion in 1996.

Among the firms making a profit in this year's first half were
railway company Perumka (Rp 5.94 billion), bus operator Perum
Damri (Rp 4.38 billion), ferry operator PT ASDP (Rp 5.69
billion), airport management firms PT Angkasa Pura I (Rp 53.03
billion) and Angkasa Pura II (Rp 69.09 billion).

PT Pelabuhan Indonesia II, which manages Tanjung Priok seaport
in Jakarta and several other ports in West Java and South
Sumatra, netted the biggest profit of Rp 106.36 billion in the
first half. (icn)