The closing share price of Garuda Indonesia, Indonesia's flag carrier, remains low in the last week of 2016, in part likely caused by the incident involving an intoxicated pilot on the airline's budget carrier, Citilink. (BeritaSatu Photo/Mohammad Defrizal)

Tipsy Pilot Incident Limits Garuda's Share Price Gains

BY :SARAH YUNIARNI

DECEMBER 30, 2016

Jakarta. The closing share price of Garuda Indonesia, Indonesia's flag carrier, remains low in the last week of 2016, in part likely caused by the incident involving an intoxicated pilot on the airline's budget carrier, Citilink.

Garuda's share price was down by 2.3 percent to Rp 338 per share on Friday (30/12) on the Indonesia Stock Exchange, backtracking on some of the gains seen this week. Despite this, Indonesia's benchmark stock index closed the week with its strongest gain in more than a year. The airline's share price has taken a tumbling since June, reporting significant losses.

Citilink removed a pilot from duty on Thursday, after the pilot purportedly showed up to work under the influence of alcohol on Wednesday, who was set to fly from Jakarta to Surabaya.

"The company's management immediately imposed a suspension on the pilot. A suspension was imposed in order to ease the negative sentiments, [likely because] the news was going viral," Bima Setiaji, an equity analyst at NH Korindo, said.

Bima said investors still believe that the company can turn its image around "as Garuda recently signed a partnership with the state-controlled postal service, Pos Indonesia, to expand its air cargo business."

Garuda booked $44 million in losses in the first nine months of this year compared to raking in $50 million in net income in the same period last year, as revenue stagnated at $2.8 billion the first nine months of this year. Garuda Indonesia's president director and chief executive, Arif Wibowo, said earlier this year that the company targets to book $10 billion in revenue over the next five years.

Despite having turned into one of Garuda's profitable endeavors, Citilink accounts for only 5 percent of Garuda Indonesia's revenue in the first nine months of this year.

It was the passengers who first noticed the pilot sounding barely coherent and mumbling the standard pre-flight announcement. Passengers then protested to have the pilot replaced.

Citilink eventually acceded to the passengers' demands after the incident, causing an hour delay. But the airline denied any notion that the pilot in question was under the influence, saying that the subsequent test at a clinic in Juanda International Airport did not detect any substance abuse or intoxication.

However, Citilink's stance changed after an airport security video was leaked to the public, showing that the pilot was unsteady, wobbling as he went through the security clearance, just minutes before the flight.

"Citilink does not tolerate the pilot's actions  ignoring the rules and procedures for flight  so we've called for further sanctions including a possible termination of employment," Citilink president director, Albert Burhan said in a statement on Thursday.

While cases of pilot substance abuse or intoxication are rarely revealed to the public in Indonesia, this incident has called into question how such an oversight could occur.

Citilink secured a license to fly into Europe on June 16 after being banned from flying in European airspace for the most part of its existence. Citilink managed to grow since its introduction in 2001 amid fierce competition with budget air travel market leader Lion Air Group and other local rivals like Indonesia AirAsia and Sriwijaya Air.

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