[Newsphopick=Kingsley Lim] The national airlines of Indonesia, Garuda, has announced that it had suffered a loss of US$712.3 million in the first half of the year as the coronavirus pandemic ravages the global economy and air travel. As such, there has been a significant decline in both sales and profits. In the same period last year, the company booked a profit of US$24.11 million.
The president of Garuda Irfan Setiaputra said that the ongoing pandemic compelled the company to reduce its frequency of flights. As such, this measure had a negative impact on its revenues and profits.
In a statement on Saturday, Irfan said that “The COVID-19 pandemic has had a severe impact on the company’s performance as our daily flight frequency has been reduced from around 400 to 100 flights. In addition, the number of passengers has also plummeted by around 90 percent.”
Total revenue for Garuda in the first half of the year declined by 58.2% from the same period last year to US $917.28 million, according to the financial statements filed with the Indonesia Stock Exchange (IDX).
There are two main sources of revenue for Garuda – scheduled flights and uncharted flights. Scheduled flights make up the bulk of Garuda’s revenue as it turned in US$750.26 million in revenues in the first half of 2020, a fall of nearly 60% from the year-ago period. Revenue from chartered flights saw a growth of approximately 400% to US $21.55 million in the first half of the year. With the fall in revenue, operating expenses fell by 22% to US$21.55 million from the year-ago period.
“The company has taken strategic financial steps by renegotiating airplane leasing costs, loan restructuring and increasing cost efficiency to align between the supply and demand trends during the pandemic,” said Irfan.
Travel and aviation has been one of the hardest hit industries in recent times. As the Indonesian government steps up its efforts to curb the spread of the coronavirus, Indonesia has reported that the entire economy has shrunk in the second quarter of the year. However, according to government officials, the country might experience growth in the third quarter as the economy opens up.
The tourist sector in Indonesia has suffered a loss of US $5.87 billion in revenue this year, the largest decline since the Great Financial Crisis. Hotels and restaurants in the country have also lost almost Rp70 trillion in revenue, while tour and aviation operators have lost Rp15 trillion in revenue during the second quarter of the year.
As part of efforts to revive the economy, the government has opened Bali to tourists. Last Friday, an estimated 4000 tourists arrived at I Gusti Ngurah Rai International Airport on the first day of Bali's reopening. >According to Chris Apriliony, an analyst from Jasa Utama Capital, Garuda’s results will improve in the third quarter as the number of flights is projected to increase. “As the COVID-19 vaccine is still under clinical trials, the public remains reluctant to take unnecessary trips using airplanes.”