Garuda Indonesia Struggling Over Climbing Costs

Wednesday, 07 June 2017 , 15:00:00 WIB - Economy

A Garuda Indonesia aircraft (youtube.com)

JAKARTA, GRES.NEWS – PT Garuda Indonesia, Tbk must make measures to improve its performance as the state-run airliner has been posting huge losses and stakeholders are worried.

"The public must know this. There is an impression that the airline is fine, but the actual fact is the government is posting a lot of losses from the company," said Mahfud L from the Airline Observers Coalition, in a release sent to gres.news (05/6).

Mahfud revealed that Garuda Indonesia booked Rp124.5 billion US$9.36 million net profit in 2016. This is an 88 percent slump from Rp1.03 trillion (US$78 million) from the previous year. In the first quarter of 2017, the company suffered Rp1.31 trillion loss.

Since 2015, the airline’s debt totaled Rp32.5 trillion. The figure rose to Rp36.6 trillion in 2016 and Rp39.6 trillion in 2017.

"As the public, we are viewing Garuda Indonesia from outside and everything would seem fine. However, the airline posted a huge loss in the first quarter. This is a national asset that must be saved," Mahfud said, in Jakarta.

According to Mafud, former Coordinating Minister for Maritime Affairs, Rizal Ramli, in August 2015, criticized the airline’s policy to buy up to 30 units of Airbus A350, which is only suitable for Jakarta-US and Jakarta-Europe flights. Hence, he claims the purchases are a waste of money.

"Rizal Ramli’s analysis are turning out true. The purchase may have created the path to bankruptcy for Garuda Indonesia," he said.

Rizal said the airline should have bought the lower class Airbus 320 to focus on the domestic and Asian markets for at least 5-7 years before expanding to Europe.

AIRLINE HAS STRATEGIES – Previously, Garuda Indonesia president director Pahala Mansury had confirmed that the airline posted Rp1.32 trillion loss in the first quarter of 2017.

He says the loss was due to fuel price and suboptimal flight domestic and international routes.

"In the past year, fuel price has climbed and costs for services and reservation systems rose," he said in a press conference, April.

Pahala revealed that both Garuda Indonesia and subsidiary Citilink posted are posting losses on a number of routes. The airlines are now deciding whether to terminate or reduce the routes.
Garuda Indonesia, he added, will ‘enhance value from subsidiary Citilink’ and ‘enhance revenue management system’.

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