Indonesia’s flag carrier boasts soaring profits

By Tassia Sipahutar | Source: ANN
PT Garuda Indonesia (GIAA) enjoyed steady growth in 2012 as net profits soared 72.6 per cent to US$110.6 million year-on-year, the Indonesian national flag carrier announced on Wednesday.

The publicly listed company attributed the net profit jump to higher revenues and its ability to maintain costs.

Total revenues grew 12.1 per cent to $3.47 billion last year. A majority of the figure came from scheduled airline with 83.1 per cent, followed by non-scheduled airline with 7.7 per cent and other businesses making up the remaining 9.1 per cent.

Garuda president director Emirsyah Satar said that during 2012, its operating expenses only climbed 10 per cent to $3.3 billion, thanks to cost efficiencies. “Passenger numbers and average flight frequency surged, but expenses did not increase much,” he said.

In 2012, Garuda’s passenger numbers rose 19.6 per cent to 20.42 million. Passenger growth was supported by a higher frequency of both domestic and international flights and network expansion.

For its domestic flights, average frequency reached 1,940 flights per week, compared to 1,750 flights per week in 2011, while for its international flights, the figure stood at 455 flights per week, up from 400 flights per week.

Last year, Garuda saw its network expand with several new domestic and international destinations, such as Tarakan, North Kalimantan; Abu Dhabi, United Arab Emirates; Haneda, Japan; and Taipei, Taiwan. As a result, Emirsyah said, the airline was able to control significant shares in domestic and international markets. “We controlled 28.2 per cent and 24.2 per cent shares in domestic and international markets, respectively,” he added.

To serve its markets, Garuda increased and rejuvenated its fleet by purchasing new aircraft. As of December 2012, Garuda owned a total 85 aircraft, a nine per cent rise from the same period in 2011. Meanwhile its subsidiary, budget carrier Citilink Indonesia, had 21 aircraft by the end of last year. The figure increased more than double from 2011.

However, despite reporting positive business growth, state-owned Garuda recorded a decline in its on-time performance rate, which fell to 84.9 per cent from the previous 85.7 per cent in 2011. Several factors contributed to the decrease, Emirsyah said, citing weather problems and limited capacity at airports.

“The [state-run airport operators] Angkasa Pura I and Angkasa Pura II are currently working to increase airport capacity. We hope to be able to maintain our on-time performance rate at 85 per cent,” he added.

This year, Garuda estimates that its passenger numbers will rise 15 per cent to 20 per cent to reach between 23.48 million and 24.5 million people. To anticipate the increase, it will set aside $300 million and $400 million for its capital expenditure (capex) budget, which will mainly be used to purchase new aircraft. The company hopes that its fleet will comprise a total of 139 aircraft by the end of 2013.

Garuda also plans to introduce new destinations this year, such as Berau, East Kalimantan; Sorong, Papua; London, England; Brisbane, Australia; and Penang, Malaysia. To finance the expansion, Garuda will sell debt papers amounting to 2 trillion rupiah ($205.65 million) in the second quarter of 2013. Garuda finance director Handrito Hardjono said that the company would use its own cash as well to fund the expansion projects.

*US$1=9,756 rupiah