A Garuda Indonesia's flight attendant walks on the business class aisle in Ngurah Rai International Airports in Denpasar, Bali last Wednesday. (JG Photo/Yudha Baskoro)

Garuda Terminates Contract of 700 Workers to Avoid Pandemic Stall

BY :THRESA SANDRA DESFIKA

OCTOBER 27, 2020

Jakarta. Flag carrier Garuda Indonesia has terminated the contracts of around 700 workers, the airline said in a statement on Tuesday, in its latest move to stay afloat during the Covid-19 pandemic.

Since May, the workers have been on furlough as the number of passengers plunged amid the government travel restrictions. 

“At this point, we have to take this tough decision in the midst of this situation, which is still full of uncertainty," Irfan Setiaputra, Garuda’s president director, said in a statement on Tuesday. 

Irfan said Garuda had taken various rescue efforts to ensure the company's sustainability amid the pandemic, including by taking up a Rp 1 trillion loan ($68 million) from Indonesian Eximbank. Still, the efforts were not enough to maintain the company’s finance.  

"Beyond our estimates, this pandemic has a long-term impact on the company's performance, and the company's condition has yet to show significant improvement," Irfan said. 

He said Garuda would ensure that it will fulfill all the rights of affected workers according to applicable regulations, including early payment of the company's obligations for the remaining employee contract period. 

Garuda and its budget airline subsidiary Citilink Indonesia hold a 46 percent market share of Indonesia’s domestic air travel market, neck to neck with its main rival, the Lion Air Group, which dominated half of the market. 

The Covid-19 pandemic and government’s travel restrictions to curb the coronavirus spread decimated that market this year. Only 21.8 million passengers fly in the January to June period this year, down 57 percent from 50.3 million in the same period last year, according to the latest data from the Central Statistics Agency (BPS).

Garuda booked Rp 10.3 trillion ($702 million) net loss in the first half this year, compared to Rp 337 billion profit in the same period last year, as revenue declined by 56 percent to Rp 13.1 trillion. 

The airline also has outstanding Rp 148 trillion debts at the end of June, more than the value of its total assets, which stood at Rp 147 trillion.


 

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