Management of PT Garuda Indonesia Tbk - Photo by TheInsiderStories

JAKARTA (TheInsiderStories) — State-owned flight carrier, PT Garuda Indonesia Tbk (IDX: GIAA) admitted adding unsolved payment over its financial report critics. The management said that there’s no payment received yet from cooperation agreement with PT Mahata Aero Teknologi.

In its financial report, Garuda claimed having US$241.94 million payment from Mahata in its revenue, even though it is actually still receivable. Based on this, the airlines company could record net profit $809.846 in 2018.

Garuda’ Financial dan Risk Management Director Fuad Rizal revealed that the payment should be received along with the cooperation contract signing. While currently, Mahata is in the process of finalizing with investors.

To ensure payment will be made by Mahata, Garuda through its subsidiary PT Citilink Indonesia, periodically conduct correspondence and discussion with the wifi provider to complete their obligations. Rizal stated that penalty for late payment will be agreed upon in the amendment to the contract.

So far, company did not charged Mahata because it had issued an invoice to the company for all obligations. He also explained that these payments can be classified as uncollectible receivables, if during the assessment, Garuda believed that the collectibility of the accounts is low.

“When the collectability is low, then company will recognize the uncollectible receivables on the company’s profit and loss statement,” he said in a written statement yesterday (05/07).

Based on the cooperation agreement, the provisions regarding the guarantee of implementation from Mahata will be arranged later in a further agreement (addendum). However, as long as there is no agreement, what applies in this agreement is a general guarantee in accordance with the Civil Code Article 1131. If there is any default, then Mahata’sassets will automatically become collateral.

Garuda and Mahata cooperated for providing wi-fi connectivity, inflight entertainment, and content management. Mahata is obliged to bear all costs for the activities of supplying, installing, maintaining, repairing and dismantling service equipment.

Meanwhile, the fligh carries and its subsidiaries, Citilink and PT Sriwijaya Air provide airlines to Mahata, and responsible for equipment damage. The cooperation between Garuda Indonesia and Mahata is tied for 15 years.

Previously, after 2018’ financial report stated in the shareholders meeting, two of its commissioners, Chairul Tanjung and Dony Oskaria rejected the report. Based on last year’ financial report, the company recorded operating income of $4.37 billion and the current year’s profit was $5.02 million. Whereas previously the company still recorded a loss of $213.39 million in 2017.

The commissioners considered that the company’ $239.94 million revenues from the Mahata agreement has a significant amount. And without the recognition of this income, Garuda Indonesia would suffer $244.95 million loss.

US$1: Rp14,200

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