Garuda Indonesia Destroyed In The First Quarter Of 2021, Revenue Down 54 Percent And Loss Of IDR 5 Trillion

Garuda Indonesia aircraft. (Photo: Wikimedia Commons)

JAKARTA - PT Garuda Indonesia (Persero) Tbk (GIAA) recorded an increase in net loss in the first quarter of 2021. In the financial statements as of March 31, 2021, the company recorded a loss of US$384.34 million or equivalent to Rp5.57 trillion amid the COVID-19 pandemic. -19 which is not over yet. That figure rose 219.86 percent from the same period last year amounting to US$120.16 million.

Quoted from the information disclosure of the Indonesia Stock Exchange (IDX), Garuda Indonesia recorded operating revenues of US$353.07 million, down 54.03 percent compared to the same period the previous year of US$768.12 million with a basic loss per share of 0.01485. US dollars.

Garuda's operating revenues consist of scheduled flights, non-scheduled flights, and others. Scheduled flights contributed the most to revenue of US$278.22 million. Revenue in the first quarter of 2021 fell by 57.49 percent compared to the same period last year of US$654.52 million.

Unscheduled flights recorded a significant increase of up to 328 percent. In the first quarter, revenue from this sector was worth 22.78 million US dollars, while in the same period last year it was only 5.31 million US dollars.

Then, other revenues recorded by Garuda Indonesia were only recorded at 52.06 million US dollars. This note also decreased by 51.92 percent compared to the first three months of last year which was valued at US$ 108.27 million.

Garuda Indonesia also recorded an increase in maintenance and repair expenses in the first quarter of 2021 to USD 159.73 million compared to the same period last year of USD 128.52 million.

Meanwhile, flight operating expenses fell to 392.25 million US dollars from the previous 525.65 million US dollars, and general and administrative expenses fell to 46.25 million US dollars from the previous 72.45 million US dollars. The Group suffered a loss of USD 385.4 million and the Group's current liabilities exceeded its current assets of USD 4.07 billion and the Group experienced an equity deficiency of USD 2.32 billion.

In the financial report, Garuda Indonesia management said this financial condition was due to the COVID-19 pandemic which was followed by travel restrictions.

"It has led to a significant reduction in air travel and has had an adverse impact on Garuda's operations and liquidity," Garuda management said.

Garuda Indonesia's efforts to reduce pressure

As part of its ongoing efforts to deal with and manage current conditions, the Group takes steps that have been and will be implemented on an ongoing basis. First, optimizing the revenue of scheduled passengers on both domestic and international routes through optimization of production and dynamic pricing strategies.

Second, increasing scheduled cargo revenue, one of which is by carrying out cargo only flights during the pandemic to compensate for the decrease in revenue from passengers in accordance with applicable regulations.

Third, closing the routes that do not generate profits. Fourth, rightsizing to increase margins on potential routes. Fifth, increase sustainable charter revenue by making short-term and long-term partnerships.

Sixth, implementing the COVID-19 protocol at all Garuda Indonesia service points (Cleanliness, Safety and Healthiness), and conducting campaigns through social media. Seventh, increasing cash flow by replacing maintenance reserves with payment guarantees (SBLC) from banks.

Eighth, actively seek alternative funding related to debts and loans that will mature. Ninth, the synergy of the Garuda Indonesia Group through route alignment and the determination of flight schedules that are tailored to market demand.

Finally, negotiating with the lessor regarding the reduction of aircraft rental costs, delays in the arrival of new aircraft, as well as the option of early redelivery of aircraft.

However, the implementation and effectiveness of management's plan in improving the Group's financial condition will depend on several assumptions, namely that creditors will agree to relax debt payments.

Then, the lessor will agree to negotiate a restructuring of the lease obligations. Then, the Group's ability to positively rationalize the number and costs of employees in accordance with the Group's long-term plans.

Including, shareholders will continue to provide financial support to the Group. Also, the Directorate General of Taxes will approve the relaxation of the payment of the Group's tax obligations.

If the Group is unable to realize the plans and actions mentioned above, the Group may not be able to continue operating as a going concern. These consolidated financial statements do not reflect the adjustments required if the Group is unable to continue as a going concern.

Net cash used in operating activities was recorded at 34.76 million US dollars, net cash used in investing activities was recorded at 98.12 million US dollars, and net cash obtained from financing activities was 100.90 million US dollars.