JAKARTA - Struggling Garuda Indonesia said its losses narrowed in 2005 due to improved cost efficiencies but earnings were hard-hit by bombings on Bali and high oil prices. The flag carrier's losses declined by 17.14 percent to Rp 672 billion (US$71.60 million) in 2005, its president Emirsyah Satar told a parliamentary commission. The already-ailing flag carrier has been hit hard by plunging arrivals on the Indonesian resort island of Bali after a triple suicide bombing there in October, as well as historically high oil prices.

Emirsyah said that Garuda missed a $55 million debt repayment schedule in December but did not give details. The carrier's debt-to-equity ratio stood at 25.4 times at the end of 2005. Total assets amounted to Rp 9 trillion, while debt was $1.2 billion, he said. Garuda spokesman Pujobroto said that the Bali attacks and soaring fuel prices eroded 2005 earnings by an estimated $14.7 million.

"We improved our efficiencies but still made a loss because of the fuel price hike and the Bali bombing," he said. "Due to the increase, fuel costs accounted for over 40 percent of costs, compared to an average of 23 percent to 30 percent in previous years," he said. Separately Mahuddin Yasin, a deputy to the state enterprises minister, said Garuda had "technically defaulted" on its debt repayment.

He said the company's cash balance has dropped to a low level and therefore requires a cash injection from either the government or creditors. "Or we can invite a strategic investor to step in," he said. Garuda announced on December 30 that it would default on some debt repayments that were due at the end of 2005. It warned then that it expected the impact from October's bombing by Islamic extremists to persist into the first half of this year.

A weakening of the Indonesian rupiah, rising interest rates and tougher competition have also weighed heavily on Garuda's performance, Emirsyah has said. The government is reportedly planning to sell Garuda to strategic investors in a bid to revive its flagging competitiveness.

Posted in Garuda Indonesia @ 23 January 2006 08:52 CET by Jeroen · · permalink

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Jeroen
Administrator

(Moderated) Posted @ 23 January 2006 09:57

Narrowing losses are still losses. With not too much money left, they should find more money soon (investment, take-over, buy-out). I hope an Indonesian company can buy a stake, then the name Garuda Indonesia will be kept, for the sake of nationalism

kiwimave
User

Posted @ 23 January 2006 17:42

Yeah just blame the terrorists and high oil prices... Can no international airline like SQ or Lufthansa take them over and stamp out KKN?

Otherwise I see a bad future, if AirAsia, Lion and AdamAir gain more ground why would anyone still fly Garuda?

Just to compare Garuda with AdamAir. I will fly to Jakarta from Jogja next Thursday, 199rb for flying with Adam in a not-too-old 737-400, and Adam is mostly on time. Ok they don't have the most beautiful pramugari (most are Chinese and white like ghosts) but I rather fly Adam then pay double for flying Garuda in an old not well-maintained aircraft

Richy
User

(Edited) Posted @ 23 January 2006 18:39

On 23-01-2006 17:42 kiwimave wrote: Just to compare Garuda with AdamAir. I will fly to Jakarta from Jogja next Thursday, 199rb for flying with Adam in a not-too-old 737-400, and Adam is mostly on time. Ok they dont have the most beautiful pramugari (most are Chinese and white like ghosts) but I rather fly Adam then pay double for flying Garuda in an old not well-maintained aircraft

... and what if I tell you that they are maintened by the same company? B

But I see your point and fully agree with you (also flew with Adam and I was very satisfied with the services they provided)... there isn't a red line through the company anymore as they switch the board of directors every few months... Selling Garuda to other international carriers... won't happen as it is a government owned company... b.t.w. Garuda Indonesia is far from interesting to be taken over by any international carrier...

Jeroen
Administrator

Posted @ 23 January 2006 19:15

Well, if they are willing to sell 50%+1 share, I'm sure someone wants to buy it. Possibly only to rip Garuda Indonesia off it's landing rights.

Richy
User

Posted @ 23 January 2006 21:02

As long as you can make any profit out of those landing rights/destinations it will be interesting for any airliner... i highly doubt about it for the international routes... but as you say there will always be some rich Indonesians who wants to put money in this company...

londoh
User

(Edited) Posted @ 24 January 2006 04:29

Last year the RI goverment intervened to avoid a strike among the Garuda crewmembers. In 2005 124 pilots went to other companies because there they receive a paycheck which is 7x higher than they did receive from Garuda.

Many losses are caused because goverment officials travelling in foreign countries had their bills paid by Garuda when they ran out of money, so far away from home. Those officials don't buy oleh-oleh less than $ 100.000 at a time

Who want a company like this. The goverment (i.e. Yusuf Kalla) thinks they have gold in their hands, I think (as negative as I always like to be ) Garuda is just a heap of scrap. I don't know what alumium does at the moment, but in Banjarmassin there is a company that produces wajan from airplane scrap.

Gruces

kiwimave
User

Posted @ 24 January 2006 05:48

Richy I'm sure you know Garuda's maintenance situation better then me. I studied 1 year aerospace engineering in Delft in the good old time and one rule I still remember and that is that if an airline is in financial problems they will always try to cut costs also on maintenance. Just look to the Mandala crash (i've to say that the cause was still unknown), but if you fly with 30 y/o 737-200's which are not well-maintained you do ask for problems.

The sad question is which airline will account for the next inevitable airplane crash in Indonesia. I think we have to look to companies like Bouraq, Mandala, Merpati or Sriwijaja which are all in financial problems and have very old aircraft. And don't forget LionAir which is doing financially well but flying with old MD-82 "graveyard planes"

Richy
User

(Edited) Posted @ 24 January 2006 16:08

What I ment to say is that most of the Indonesian airliners are maintened by GMF. In certain way you can conclude that all maintenance should be performed in the same way for all those airliners (as it will happen on regular basis). I agree with you that financial problems of any airliner has a direct influence on the safety factor. It is only a matter of time till the next smoking hole in the ground is created.

For our Dutch members:

"Eind december werd bekend gemaakt dat de privatisering van Garuda gepland staat voor 2009."

Bron: www.luchtvaartnieuws.nl/news/?id=12101

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