Garuda Indonesia Widens Losses in Half-Year 2016

Indonesia national flag carrier Garuda Indonesia experienced a loss of US$63.2 million (IDR 824 billion) in the first half of 2016, due mostly to a decline in yields on domestic routes. The announcement was done on Monday in Jakarta during a press conference by Garuda Indonesia president director Arif Wibowo. In the same period of last year, the company booked a net profit of USS$29.4 million (IDR 392.6 billion).

Despite the regulation of prices on domestic routes with a capped minimum fare imposed by the government, tight competition on domestic routes translated into a decline of almost 10% in yields compared to the same period of 2015, highlighted Wibowo. The seat load factor — for the entire network fell 5 percentage points to 70.8% in the first half of the year.

Total revenues of the carrier were down by 4.1% compared to the same period of 2015, reaching US$1.76 billion due to the weak Rupiah exchange rate compared to last year. Although Arif Wibowo estimates that the rupiah is now strengthening and with economic growth gains momentum, the second half year would probably improve the airline’s financial results.

Garuda Indonesia added so far more capacities on passengers routes for the first half of the year. While routes to Korea, Japan and Europe showed disappointing results, the airline sees a turn around for its London route after switching from Gatwick to Heathrow and by doing a stop in Singapore. The airline launched new routes this year from Bali to Shanghai, from Medan to Singapore, from Jakarta to Lake Toba in Northern Sumatra as well as to Madinah in Saudi Arabia. It also operated seasonal flights from Bandah Aceh to Jeddah for pilgrimage. With Medan-Singapore, the carrier operates up to six destinations to and from Singapore, which acts again as a mini-hub for the carrier.

Garuda Indonesia put into service 9 of its 17 new aircraft. The carrier plans to further boost capacities to China, opens flights to India and maybe expand to a third European destination in the longer term.