Garuda Indonesia has outlined the measures undertaken in light of uncertainties caused by the coronavirus pandemic.
In response to a stock exchange query made on 16 April, the airline says it has begun negotiations with lessors to delay payment on leased aircraft and to extend their lease periods.
It will renegotiate with external parties on its obligations that are due, while seeking financing support or loans from financial institutions.
The airline has embarked on a cost-efficiency programme to reduce its expenses by 15-20%, and is seeking some form of government support.
It has also “optimised” the number of flights it operates and the capacity deployed, by operating cargo-only and repatriation flights, closing unprofitable routes, delaying the delivery of four Airbus A330-900neos planned for this year. It also plans to grow its international hubs of Amsterdam and Japan by taking advantage of interline services with other carriers.
In its outlook for the next six months, the carrier expects that conditions will deteriorate, as there is a lack of clarity as to when the pandemic will end. It pointed out that the months of May and June is the peak season for travel as it coincides with the end of Ramadan and Indonesia’s school holidays. It may also be unable to operate Hajj flights this year, which falls in the July-August period.
Garuda adds that it expects to see a 33% decline in its total revenue for the first quarter of 2020, due to a decline in its passenger segment revenue, as well as falling passenger numbers and ticket prices.
It notes that the passenger segment contributes more than 80% of its total revenue, and the fall in passenger numbers comes after Indonesia implemented measures to limit the spread of the coronavirus outbreak. The country’s weakening economy has also impacted purchasing power.
In 2019, Garuda posted an operating profit of $147 million, a turnaround from 2018’s $199 million operating loss. Revenue came in at $4.56 billion, and net profit was $7 million.