Garuda Indonesia Drops 2018 Profit Hopes, Aims for Losses Under $100m

Newly appointed Garuda Indonesia chief executive Ari Askhara has abandoned the national flag carrier's hopes of making a profit this year, saying he aimed to keep losses to below $100 million despite rising fuel prices and a weaker rupiah. (Reuters Photo//Darren Whiteside)

By : Cindy Silviana | on 8:01 PM September 13, 2018
Category : Business, Corporate News

Jakarta. The new boss of national flag carrier Garuda Indonesia has abandoned the state-owned airline's hopes of making a profit this year, saying he aimed to keep losses to less than $100 million despite rising fuel prices and a weaker rupiah.

Ari Askhara was announced as chief executive on Wednesday (12/09) following a shareholder meeting. He replaces Pahala Mansury, who was in the job for just 17 months and said in July he still hoped the airline could break even this year.

"We are determined to reduce our losses by a minimum target of below $100 million by the end of year," Ari told reporters on Tuesday.

"The current condition is more difficult. The rupiah has depreciated and oil prices are likely to increase," he added.

Ari said he would look at increasing profitable flying routes for new markets, including for Japan and China, and would renegotiate the company's aircraft leases.

"Garuda will also finalize its memorandum of understanding regarding shares selling with its aircraft maintenance and repair unit Garuda Maintenance Facility AeroAsia [GMF AeroAsia] and strategic partners," he said.

The new chief executive, whose full name is I Gusti Ngurah Askhara, had until Tuesday headed state-owned enterprise Pelabuhan Indonesia III. He is also a former chief financial officer of Garuda.

Pahala had been criticized by staff for his cost-cutting. The Garuda Pilot Association (APG) briefly threatened in July that at least 1,300 pilots and 5,000 cabin crewmembers from the carrier would go on strike over complaints about management, a reduction in flight hours and the removal of annual raises.

However, he told reporters that there had been "no problems" with the union, only "miscommunications."

Six directors on Garuda's board were replaced on Wednesday, including Pahala.

The flag carrier reported a $116.86 million net loss for the first six months of the year, versus a $281.8 million net loss in the same period last year, when the company was hit by big one-off costs related to Indonesia's tax amnesty program.

Reuters

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