Garuda Indonesia's operating loss in the first half of 2017 saw a nearly sixfold increase to $215 million, compared to the same period a year ago.
Revenue for the six months to 30 June grew 7% to $1.89 billion, but this was outpaced by a 16.7% jump in total operating expenses to $2.1 billion, says the SkyTeam carrier in its financial statements.
The higher operating expense was led by a 16.8% increase in costs related to flight operations. Maintenance and overhaul, airport, ticketing and marketing activities, passenger services, and administration costs also went up.
Its attributable net loss came in at $282 million, widening from the $63.6 million loss posted a year ago. Complicating matters for Garuda were losses related to foreign exchange, tax benefits, and cash flow hedging.
In a statement, Garuda says it was able to reduce its second quarter net loss to $38 million, a significant decline from the $99.1 million loss in the first quarter of 2017.
"In line with Garuda's growing business and operating revenues, the company continues to be burdened by fuel prices which grew 36.5%, as compared to last year. We also had a non-incurring expense of up to $145.8 million, one of which includes the government's tax amnesty programme," says the airline's chief executive Pahala Mansury.
In an attempt to improve its operating performance, the carrier is taking measures such as optimising its fleet through reconfiguring its seats and network, contract renegotiations with lessors and airframers, and boosting its online revenue.
As of 30 June, Garuda's cash and cash equivalents stood at $381 million, down from the $579 million it had on 31 December 2016.
The carrier's total assets stood at $3.77 billion as at 30 June, and total liabilities amounted to $3.05 billion.
Hours before Garuda released its financial results on 27 July, the company issued a statement on the Singapore Stock Exchange seeking to amend conditions of its 2015 $500 million global sukuk issue after its financial performance failed to meet the issue's original terms.
These include amending conditions stating that its consolidated total equity shall not fall below $500 million, and that its consolidated debt to equity ratio shall not exceed three times. At the same time, it wants to change the definition of "consolidated total debt" to exclude references to "indebtedness under a finance or capital lease", and to waive any dissolution or breach of terms and conditions.
The airline notes that as of 27 July, it is no longer in compliance with the condition that consolidated total equity should not fall under $500 million, says the announcement. This is a potential dissolution under the terms of the declaration of trust.
The carrier is hence seeking to amend the conditions to maintain financial compliance across its capital structure, and to "seek operating and financial flexibility to better meet economic challenges during the remaining tenor of the certificates".