Garuda Indonesia could delay some of the fleet renewal aircraft it has on order and cut some long-haul routes following its first-half net loss of $212 million. Operational costs jumped 15%. The carrier said the results were primarily due to a weaker exchange rate on the rupiah along with an increase in fuel prices.
The SkyTeam carrier may also look at axing plans to restart its flagship Jakarta-Amsterdam Boeing 777-300ER service, slated for launch in September.
As of the beginning of 2014, Garuda had 27 new aircraft on order from Airbus and Boeing, including A330s, 777-300ERs and 737-800NGs. With a target budget reduction of around $55 million, it is likely that Garuda CEO Emirsyah Satar will put at least some of these aircraft on hold.
Cost reductions also mean the airline will cut some routes and curtail several route introductions originally planned for later this year.
“We plan to close less profitable routes and to [implement] efficiency measures to cope with rising costs that put pressure on the firm’s expansion plans,” Garuda's VP-communications said.
The airline will abandon plans for at least two new routes between its base at Jakarta’s Soekarno-Hatta and Manila, and from Jakarta to Mumbai. Both were slated to start operations later this year.
The airline also shut down its Jakarta-Taipei route last week as part of what it called a “current efficiency campaign.”
Garuda said that between 30% and 40% of its operational costs to toward fuel, so all ultra-long-haul routes are likely to come under particular scrutiny.