Indonesia's flag carrier, Garuda Indonesia, on Friday reported a $22 million net profit for the July-September period, swinging from a $19 million loss in the year-ago period, helped by lower fuel prices and cost-cutting.
Revenue fell 6% to $1 billion. Haze caused by slash-and-burn land clearing has blanked Indonesia's Sumatra and Kalimantan islands, as well as Singapore and Malaysia, in recent months, forcing airlines in the region to cancel or postpone flights. Garuda canceled at least 449 domestic flights in September due to the haze.
In a text message, Garuda Chief Financial Officer Ari Askhara said the haze has hit passenger growth since July. In the six months through June, passenger volume surged nearly 20%. "The cost is big," Askhara said, adding it is uncertain when passenger numbers will recover. The Indonesian government's steps to control the haze have so far had little success.
Despite the decline in revenue, much cheaper jet fuel, which accounts for about 30% of Garuda's costs, helped lift the airline into the black. Marketing and administrative spending also fell. Garuda has stepped up cost-cutting efforts this year after reporting a $373 million loss in 2014.
The earnings announcement gave a boost to Garuda shares, which rose in line with the broader index. But "the impact of the haze will remain a concern among investors," said an analyst at a local securities house.
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