summary
- Garuda Indonesia’s strategic actions following its restructuring led to significant revenue growth in 2023.
- Debt restructuring efforts have eased Garuda’s financial burden, reducing short-term debt by 30%.
- The airline group will prioritize profitability and cost efficiency and focus on some international services in 2024.
No airline was left unaffected by the COVID-19 pandemic, especially in Southeast Asia, where strict and prolonged lockdowns left a gaping hole in airline balance sheets. It can be said that some airlines felt that this was more severe than others. The impact of the pandemic was almost the straw that stuck with already struggling airlines such as Thai Airways International and Garuda Indonesia, both of which are now looking fairly healthy.
Revenue and passenger numbers soar
Last week, national carrier Garuda Indonesia announced its 2023 financial results, showing operating revenue of $2.9 billion, an increase of 40% year-on-year, and net profit of $252 million. This was a significant decrease from net profit of $3.7 billion in 2022, which was primarily driven by gains from group restructuring.
Photo: Nieuwland Photography I Shutterstock.
The group will transport 19.98 million passengers in 2023, an increase of 34% year-on-year, while Garuda Indonesia will transport 8.29 million passengers and low-cost carrier Citylink will transport 11.68 million passengers, with a passenger load factor of 72.44% respectively. and 78.7%. The group recorded a load factor of 74.88% in 2023, while Garuda Indonesia (Garuda) recorded an impressive on-time performance of 87.3%.
Photo: Airbus
Operating costs increased by 4% to $2.6 billion, while fuel costs rose 27% year-on-year to $957 million due to increased flight activity, accounting for nearly 30% of the group’s total expenses. The situation could have been worse, as Gaulda said optimizing fuel costs helped the group save around $16.1 million in December. Irfan Setiaputra, President of Garuda Indonesia, said:
“The strategic corporate actions undertaken to accelerate the recovery following the restructuring, coupled with increased passenger numbers, have laid the foundations for the entity to optimize business revenue and ensure sustainable profitability. We look forward to further strengthening.”
To meet continued high demand, the group plans to add nine aircraft in 2024, including one aircraft postponed from last year, which will be leased during the annual Hajj season. does not include additional aircraft. Aircraft arriving sequentially throughout the year include four single-aisle Boeing 737-800s, two widebody 777-300ERs, and two Airbus A330-200s. Some of that capacity will enable Garuda to launch flights to Doha, Qatar, and the airline said it is complying with lessor requirements for new aircraft leases.
Photo: Boeing
Published fleet numbers are not necessarily 100% accurate. For Garuda Indonesia, the situation worsens as aircraft enter service and retire. The best estimate is that the airline has 69 aircraft in its fleet at the end of September 2023, including 37 Boeing 737s, eight 777s, and two Airbus A330s. It said it has 58 aircraft in operation, including 13 Airbus A330s. According to the report, Citylink operated 45 aircraft, including 34 Airbus A320s, five A320neos, one A330neo and five ATR 72-600s.
New strategy reduces debt burden
Since late 2021, the aviation group has been restructuring its debt, and its efforts paid off with approval from creditors to reduce its debt by up to 50% in 2022, from $10.9 billion to $4.79 billion. He made a major contribution to the airline’s performance. Its recovery.
Photo: Markus Mainka/Shutterstock
Debt burden fell further last year, with short-term debt falling by 30% from $1.68 billion to $1.16 billion. Garuda has several debt repayment schemes, including debt to equity conversion, repayment from operating cash flow, and issuance of new bonds or sukuk (Islamic bonds).
Garuda is implementing a “Rebound Forward” operational strategy aimed at securing three quick wins under the headings of full service, simplicity and profitability.
Recognizing the power and strength of Garuda Indonesia’s brand, the airline’s strategy is to be recognized as the most trusted brand offering authentic and enhanced service and digitally enabled packages to its customers. The “simple” aspect means focusing on domestic flights and selected international services, and exploring effective synergies with Citylink, such as flight planning, aircraft type optimization, and integrated talent management. To do.
Looking ahead to 2024, the Group is prioritizing profitability and focusing on cost efficiency and restructuring among its subsidiaries. These include low-cost airline Citylink, maintenance and repair operator GMF AeroAsia, logistics business Aerowisata and ASYST, a provider of advanced IT solutions for the transport and travel industry.
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