Garuda Indonesia defends 2018 accounts amid regulator scrutiny

PT Garuda Indonesia(pic), Lion Air and PT AirAsia Indonesia are among the carriers which cut prices from Jan 11, the Indonesian National Air Carrier Association said in a statement yesterday.

JAKARTA: PT Garuda Indonesia defended the validity of its 2018 finances after a regulator raised questions about how the national carrier accounted for certain transactions, including with a start-up technology company.

The airline booked revenue of $211.9 million from PT Mahata Aero Teknologi in exchange for the rights to provide in-flight entertainment and internet connectivity on Garuda’s flights, according to its annual report. 

The contribution helped Garuda to report a net income of $809,846 last year compared with a loss in 2017.

“The accounting rule requires us to record the transaction in such a way,” Fuad Rizal, director of finance and risk management, said at a press briefing at Jakarta Airport on Wednesday. 

“Even under an extreme situation where the contract was terminated by Garuda or by Mahata, our rights over the receivables will not go away.”

His comments come five days after Indonesia’s Financial Services Authority, known as OJK, said it will scrutinize some dealings which may affect Garuda’s 2018 financial results. The agency may impose sanctions on the company or its auditor if wrongdoing is uncovered, OJK said.

The shares have slumped 15 percent this month, partly due to concerns over the probe, though the stock is still up 46 percent over the past year.

“Garuda has no risks in this contract and we don’t have to incur any expenses,” Rizal said. “Only Mahata can offer a business concept where Garuda or the airline doesn’t have to incur any expenses to provide airborne internet connection for the customers.”

Garuda Group is Mahata’s only customer, Thomas Widodo, the tech firm’s business development director, told reporters. - Bloomberg


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