JAKARTA: National flag carrier Garuda Indonesia maintained a net profit in the first nine months of the year, a rebound from last year’s loss although flight cancellations caused by haze in Sumatra and Kalimantan undermined its financial condition, an executive has said.
“As we were affected in the third quarter [by the haze], the net income is still significant compared with last year,” Garuda Indonesia president director Arif Wibowo said on Friday.
Its net income year-to-date (YTD) stood at US$51.4 million as of September, a significant increase from the $220.1 million loss over the same period last year.
He estimated that the company’s potential losses could reach $8 million, even though it still posted $2.845 billion in total revenue as of September, slightly up from $2.831 billion in the same period last year.
“Our revenue has been hampered by the haze, the volcano [eruption] and other incidents. Our opportunity loss almost hit $8 million, with $6 million being passenger-related. We could have grown [our revenue] by 5 percent,” he said.
Over the past few months, provinces such as Riau, Jambi, North Sumatra, South Sumatra and Central Kalimantan have been struggling with smoke from man-made and natural land and forest fires.
The ongoing disaster has hampered a lot of flights as the worst-hit areas experience very limited visibility. In Pontianak, West Kalimantan, visibility stood at 250 meters on Oct. 22, while airport authorities generally need a minimum visibility of 1,500 meters to give aircraft landing or take-off clearance.
He also added that the recent Mount Raung eruption had also negatively impacted the company’s revenue stream.
Garuda chief financial officer Ari Askhara added that so far, the company had spent at least $3 million dollars on compensation for passengers in August and September.
Garuda still banked profits from various measures aimed to reduce operational costs by boosting efficiency and benefiting from a lower fuel price.
The company managed to decrease its total expenses in the first nine months this year to $2.72
billion from $3.08 billion in the same period last year.
“If we have a good network, good flight deployment, crew scheduling, crew rotation, it will minimize costs. We have also done economical refueling, where we detect places with higher fuel prices and try to refuel in places with lower prices,” Arif said.
He also said that the company had optimized planes, to minimize losses from aircraft deployment.
Garuda recorded positive passenger growth, with 17.69 million passengers flying with the airline in the first nine months of the year, compared with 15.56 million passengers in the same period last year.
Its share in the domestic market has also rose to 44 percent in the first nine months compared with 37 percent in the same period last year, while its share in foreign markets reached 28 percent compared with 22 percent last year.
Garuda will also boost its flight frequency for umrah (minor pilgrimage to Mecca), as operating revenue from non-scheduled airlines from umrah, among others, made up 6.20 percent of its total operating revenue.
“We want to increase services to five times a day from current three times daily,” Arif said, adding that the company has also taken advantage of its participation in haj pilgrimage flights. The company also remained upbeat that the fourth-quarter peak season would help it reach its targeted revenue of around $4 billion by the end of the year.
“It’s tough with a rupiah depreciation that has hit 12 percent. But even if revenue is down, if the costs are down, as they are at the moment, we still book a profit,” Ari said.
