Garuda Indonesia posts net loss of $10.9 million in first half

JAKARTA, Indonesia - State-controlled airline Garuda Indonesia swung to a loss in the first half as finance costs from the company’s expansion plans outpaced revenue from higher passenger numbers.

Garuda Indonesia posts net loss of $10.9 million in first half

JAKARTA, Indonesia – State-controlled airline Garuda Indonesia swung to a loss in the first half as finance costs from the company’s expansion plans outpaced revenue from higher passenger numbers.

Garuda and its subsidiaries posted a net loss of $10.9 million in the January-June period, compared to $1.9 million profit in the same period last year, according to the flag carrier’s report released on Friday.

The airline has five direct subsidiaries including budget airline Citilink and hotel-and-catering operator Aero Wisata.

Revenue rose by 14 percent to $1.7 billion, but an increase in operational costs, including fuel prices and wages, resulted in lower operational income at $14.3 million, which was down 0.7 percent.

In addition, Garuda’s finance costs doubled to $23.2 million from $12 million, as it began loan-interest payments for recent purchases.

Still, the airline echoed a positive tone regarding the results, noting that excluding its subsidiaries, Garuda would have pocketed $20.9 million in profit, president director Emirsyah Satar said in a statement on Saturday.

Emirsyah also said Garuda and Citilink’s domestic market share rose 27 percent in the in the six months to June. Domestic travelers on Garuda rose 27 percent to 10 million passengers, and that rate was faster than the 9.9 percent growth to 25.5 million passengers for the entire domestic market, Emirsyah said.

“We see demand for domestic flights will continue to grow as government plans to open 24 more airports in the next two years,” said Emirsyah.

The number of passengers in Garuda’s international flights also climbed, rising 8.5 percent to 1.9 million passengers, he added.

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Garuda had purchased 20 new aircraft in the first half, composed of one Boeing B777-300ER, four Boeing 737-800 NGs, one Airbus A330-200, eight Airbus A320-200s, and six Bombardier CRJ-1000 NextGen aircrafts — bringing the total fleet for Gardua and Citilink to 126 aircraft.

Last month, Garuda had to delay a direct flight from Jakarta to London as the tarmac at Jakarta’s Soekarno-Hatta International Airport could not accommodate the weight of its new Boeing B777-300ER, which was operating a full load.

Garuda plans to open a direct flight between Jakarta and Osaka in the fourth quarter of this year. Some 500,000 Japanese visitors arrive in Indonesia each year, although the figures are still lower than the average of 650,000 who visited the country prior to the 2002 bombings in Bali.

To expand its network, Garuda will acquire 24 new planes including four Boeing 777-300ERs, three Airbus A330s, 10 Boeing 737-800s and seven Bombardier CRJ1000s. The airline also plans to open 17 new domestic routes and five international routes this year.

“Garuda will continue its program to transform and expand its business despite the current global aviation industry being dragged by the world economic climate,” Emirsyah said. In an effort to boost profit the airline will try to sell $5.3 million worth of tickets at a travel fair scheduled later this month.

Garuda flies to 34 cities in Indonesia and 19 international destinations, including Asia, the Middle East and Europe. Garuda faces competition from Lion Mentari Airlines, the Indonesian company behind budget carrier Lion Air, which just launched its full-service airline ,Batik Air on select domestic routes.

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