Garuda awaits rupiah reckoning
JAKARTA – Garuda CEO Emirsyah Satar has told the media in Indonesia, “We are still positive about our operating profit despite the depreciation of the rupiah. Thus far, we have recorded a substantial income.”
The CEO later admitted that the foreign currency cost related to the rupiah’s depreciation remains to be calculated.
During the first eight months of 2008 Garuda booked a net profit of US$27.2 million, an increase of five per cent in rupiah terms over the same period in 2007.
Bali Update (www.balidiscovery.com) reports that aviation insiders are projecting the following possible impacts for Garuda, from the worsening economic crisis:
– A possible delay in the planned IPO originally scheduled for 2009. Current market conditions may be inimical to seeking a strong initial share price for Garuda shares offered to the public, necessitating a delay in plans to “go public” with a portion of the Airline’s stock portfolio.
– Tight credit globally may make it difficult for Garuda to secure the backing of financial institutions needed to conclude the lease arrangements for new aircraft on order and central to its corporate restructuring plans.
– Plans to commence service to Europe in 2010 may need to be delayed in the face of tight credit and reduced consumer demand for long-distance travel.
– Still to be factored in is the potential effects of declining passenger demand and heightened competition for domestic air passengers; lower fuel costs; and still-to-be-seen impact of the world financial crisis on passenger travel ex Australia, South Korea, Mainland China and Japan that represent key source markets for Garuda.
Ian Jarrett
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