Profits Disappearing into Thin Air

Q3 2014: Garuda Indonesia Loses US$219.5 million
PT Garuda Indonesia has booked a loss of US$219.5 million (Rp. 2.63 trillion) for Q3 2014, increasing 1,363% compared to Q3 2013 when a loss of US$15.01 million was recorded.

Quoted by Bisnis.com, the CEO of Garuda Indonesia, Emirsyah Satar, said in mitigation that the business cycle of the airline business generally tends to show improvement during Q2, improving further in Q3, Describing the cyclical upturn in business, Emrisyah continued, saying, “Particularly during the period of August and September 2014, when there was an increase in bookings and the annual operation of the hajj pilgrimage flights begin.”

Garuda’s flight frequency for domestic and international flights increased 15,4% from 143,499 flights in Q3 2013 becoming 165,642 flights in Q3 2014. Similarly, available seat kilometers (ASK) increased 15.8% from 31.96 billion seat kilometers in Q3 2013 to 36.9 billion sear kilometers in Q3 2014. During Q3 2014 Garuda’s on-time performance improved markedly in Q3 2014 with 89.6% of all flights on time compared to 85.5% in the same period one year before.

Citilink
Garuda’s subsidiary company Citilink also experienced strong growth during Q3 2014. Total passengers carried increased 39.3% from 3.8 million in Q3 2013 to 5.3 million in Q3 2014. Emirsyah blamed Garuda’s loss on the poor condition of the world’s general economy, the high price of fuel, high operating costs and the depreciation of more than 20% in the value of the Indonesian Rupiah against the U.S. Dollar.

Emirsyah, who will soon end a ten-year terms as CEO of the National Airline, said Garuda Indonesia’s losses were further augmented by the slow rate of infrastructure development in the national aviation sector with resulting inefficiencies for flight operations. Also contributing to the losses suffered by Garuda, he said. is the increasingly competitive marketplace with the expansion of low-cost airlines and middle-eastern airlines flying to Indonesia.

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