JAKARTA (TheInsiderStories) – State-owned flag carrier PT Garuda Indonesia Tbk. Persero (IDX: GIAA) has set a moderate growth target this year after being hit by severe financial losses in 2017, the result of a tax amnesty and hefty multi-million fines
after being found to have participated in a cartel to fix air cargo prices.

Revenue in 2018 is expected to rise to US$4.9 billion from estimated 2017 revenue of around US$4 billion, with the airline forecast to report a net profit of US$8.9 million, according to Finance Director Helmi Imam Satriyono.

The airline should release its 2017 earnings results next month. Helmi explained how the company needs time to complete consolidation after suffering a US$222 million net loss in the first nine months of 2017.

The company is in the process of negotiating with an aircraft manufacturer to postpone delivery of new planes.

“We expect a considerable recovery in the second half,” he said.

Garuda estimates an 11 per cent rise in passenger numbers this year, up from 24 million passengers carried last year, Satriyono said.

The company’s international traffic declined late last year due to the volcanic eruption of Mount Agung in Bali, while domestic flights held up. This year Garuda targets an increase in international route passenger numbers of up to 17 per cent, while domestic carriage is expected to rise 9 per cent.

Meanwhile, the company is planning to issue US$750 million in global bonds to refinance old debt, as well as a separate Rp2 trillion (US$150.21 million) in bonds to finance operational expenses and business expansion.

“We hope to issue them in June at the latest,” he stated.

Garuda’s unit PT Garuda Maintenance Facility AeroAsia (IDX:GMFI) said on Monday it would pick Air France-KLM’s maintenance, repair and overhaul unit as a strategic investor after narrowing down a list of potential partners.

Throughout the 9M 2017 period, Garuda Indonesia Group (Garuda and its unit PT Citilink Indonesia) managed to carry 26.8 million passengers along, or grow 3 per cent compared to 9M 2016 period of 26 million passengers.

The Company is currently focusing on efficiency, and aims to reduce costs by up to US$30 million.

Various severe actions have reduced costs, including closing unprofitable Jakarta-London and Jakarta- Melbourne routes, thus saving 30 per cent in expenses.

Email: elisa.valenta@theinsiderstories.com