JAKARTA (THE JAKARTA POST/ASIA NEWS NETWORK) - National flag carrier Garuda Indonesia has booked US$1.07 billion (S$1.44 billion) in losses in the first nine months to end-September, a reversal from the US$122.4 million profit it saw in the same period last year, as the aviation industry is hit by the coronavirus crisis.
The financial loss came after Garuda's revenue plunged by 67.8 per cent year-on-year (yoy) to US$1.13 billion in the first nine months of the year, according to the company's financial report.
Jasa Utama Capital analyst Chris Apriliony told The Jakarta Post on Monday (Nov 9) that Garuda's recorded loss fit analysts' prediction, as the country's airlines are still struggling to market their tickets to consumers.
"The company's loss aligns with our prediction because we see that Garuda is struggling to sell seats, which affects its balance sheet," he said in a phone interview.
The Garuda Indonesia Group, which consists of full-service airline Garuda Indonesia and low-cost carrier Citilink, suffered a 65.6 per cent nosedive in passenger numbers to 8 million in the January-September period, from 23.3 million passengers in the same months last year.
The seat load factor, meanwhile, has dropped by 23.1 percentage points yoy to 49.8 per cent as of September.
The ongoing pandemic has hit the aviation industry hard, with people canceling their travel plans because of border closures and health restrictions.
The government, through the Transportation Ministry, has been trying to boost air passenger numbers by providing passenger service charge (PSC) exemptions worth 175.7 billion rupiah (S$16.6 million) as part of its 216.5 billion rupiah aviation industry stimulus package introduced in October.
The PSC is included in the price of a ticket, so an exemption would lower the airfare.
The exemption is available for flights booked between Oct 23 and Oct 31 with scheduled departures before midnight of Jan 1, 2021.
State-owned airport operator Angkasa Pura I recorded a 16.9 per cent month-on-month passenger increase in October, following the start of the stimulus programme.
While the stimulus could provide a much-needed passenger boost, Chris said the programme would only lead to incremental growth for Garuda's financial performance, as the company had always enjoyed various government subsidies.
The latest government intervention includes a 8.5 trillion rupiah capital injection through a mandatory convertible bond scheme in July.
In order to prevent further losses, Chris said Garuda should be focusing on its main business line of scheduled flights and cut off some of its underperforming subsidiaries.
"I hope the company can put all of their efforts in their main business line of scheduled flights to push down operational costs and improve profit," he said.
According to the company's financial report, Garuda has direct ownership of six subsidiary companies, including travel agent Garuda Indonesia Holiday France S.A.S in Paris and tourism company PT Aero Wisata.
However, Chris projected that Garuda would post a better result in the fourth quarter this year, as well as in 2021, as demand for domestic travel has steadily increased in the last several months.