Garuda Indonesia Sees Red in Q1 2005

(5/2/2005)

Garuda Indonesia - the national flag carrier of Indonesia, reported losses during the first 3 months of 2005 totaling Rp. 139 billion (approximately US$14.5 million). On a daily basis, that's equal to a loss of Rp. 1.54 billion (approximately US$157,500) each and every operational day - a total slightly better than the estimated Rp. 1.6 billion lost during every day of operation by Garuda in 2004. On a quarter to quarter comparison basis, however, Garuda's first quarter losses are 89% larger than the same period a year before fueling concern that the final numbers for 2005 may exceed the Rp. 618 billion operating loss (approximately US$63 million) posted in 2004.

Speaking to the Indonesian-language daily Kompas, the Airline's newly-appointed President Director, Emirsyah Satar, said that the Airline lost money on 65% of its 33 international routes while suffering losses on 71% of its 27 domestic routes.

Garuda is burdened with debts of US$ 826 million requiring yearly repayments totaling US$110 million. With targeted "break-even" annual revenues for 2005 of only Rp. 10.6 trillion (approximately US$ 1.1 billion) there is genuine concern among Garuda’s management funds in hand will be insufficient to meet the Company's debt service. As a result, Garuda's bosses will soon be meeting in coming days with the European Credit Agency - the creditor who holds the Airline's debt, to seek a further rescheduling of their current debt load.

Garuda operates a total of 57 aircraft, 26 of which are Boeing 747-400's. At the height of its corporate glory, the airline flew to both the U.S.A. and Europe and was the largest airline in the Southern hemisphere. In recent years, however, Garuda has shrunk to become a shadow of its former self now serving destinations only within Austral-Asia and the Middle-East.

In a step to counteract the effect of rising fuel costs, the Jakarta Post reports that Garuda plans to impose a US$25 surcharge on flights operating between Australia and Indoneisa and US$12 on flights between Indonesia and the Middle-East.