Garuda Needs Comprehensive Solution to Avoid Bankruptcy

Saturday, 12 August 2017 , 12:00:00 WIB -

Airbus A350 aircraft purchased by Garuda Indonesia (doc.airbus.com)

JAKARTA, GRES.NEWS – Chairman of Indonesian Young Entrepreneurs Association’s Central Executive Board (BPP HIPMI), Anggawira, said that PT Garuda Indonesia needs a comprehensive solution to prevent more losses. He said if the company keeps suffering losses and there’s no concrete solution to the issue, the company will face bankruptcy.

He said that the critical situation is shown by the financial statement of Garuda Indonesia that recorded US$283.7 million (Rp3.8 trillion) losses. "The number increases by 200% from the losses in the first quarter that reached US$99 million or worth Rp1.319 trillion," Anggawira said in a press release received by gres.news, Friday (11/8).

According to Anggawira, HIPMI has given an early warning to Garuda Indonesia as the company keeps making losses. We need a comprehensive solution so the jubilated national airline can survive. "The losses are said to be caused by the increasing costs of operations and avtur fuel purchase," he said.

Anggawira said the costs of operations for the flight of Garuda Indonesia reaches more than Rp16 trillion, higher than the costs of operations in the first quarter that reached Rp8 trillion.

"Until today, we see that fuel costs are the biggest contributor to the operations cost with the percentage above 50%, followed by the costs of aircraft purchase, repairs, insurance payment that are calculated using USD rate of exchange while the domestic flight service is sold using Rupiah rate of exchange," Anggawira said.

The high costs of operations cause the debts of Garuda Indonesia increases highly. The short-term debt in the second quarter reaches US$1.891 million while the long-term debt reaches US$1.163 million.

In the previous quarter, the short-term debt reached US1.798 million, and the long-term debt reached US$1.174 million. "The debts of Garuda Indonesia must be concerned by the government," Anggawira said.

The net loss of PT Garuda Indonesia Tbk in the first semester of 2017 reached US$283.8 million. Excluding non-recurring expenses, the company’s total net loss reaches US$138 million. (mag)

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