Garuda Indonesia's unaudited losses for 2005 tallied in at Rp. 672 billion (approximately US$70.7 million) – an improvement over the US$ 81 million loss in 2004 – but hardly a cause for celebration at the debt-ridden airline which is unable to meet repayments on the more than US$1 billion it currently owes to its European creditor.
Quoted in the Indonesian-language Bisnis Indonesia, the Airline's President Director Emirsyah Satar balmed the losses on escalating fuel costs estimated to consume 30% of the airlines total routine expenditures, calculated at US$80 million each month.
In order to escape its current financial predicament Garuda is busily negotiating a rescheduling of its debts with major creditors; seeking a strategic international partner in order to enhance the Company's overall competitiveness; and hoping to launch an initial public offering (IPO) on the Jakarta Stock Exchange in order to raise some badly needed cash.
Garuda is also working to rationalize its business including reducing to three the total types of airplanes used in its fleet.
According to figures published by Bisnis Indonesia, the Airline has seen its current ratio decline from 0.96 to 0.60 since 2003 – reflecting the growing liquidity problems it now faces. Similarly, during the same 3 year period from 2003 – 2005, Garuda's debt-equity has worsened from 4.96 to the current worrisome 25.38.
With debts now totaling 25 times more than its net worth, finding suitors and investors may prove troublesome for Indonesia's National Carrier.
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