July 6, 2018 / 6:41 AM / 8 months ago

Garuda pilots call off strike plans, airline to break even this year: CEO

JAKARTA (Reuters) - Pilots at Indonesian flag carrier Garuda have agreed not to go on strike, Chief Executive Pahala Mansury said on Friday, easing pressure on the airline’s earnings at a time when oil prices are surging.

FILE PHOTO: Garuda Indonesia planes are seen on the tarmac of Terminal 3, Soekarno-Hatta International Airport near Jakarta, Indonesia April 28, 2017. REUTERS/Darren Whiteside/File Photo

The Garuda Pilot Association (APG) had threatened last month that at least 1,300 pilots and 5,000 cabin crew members from the carrier would go on strike, over complaints about management, reduction in flight hours and the removal of annual raises.

Mansury said the airline still expected to break even in 2018, despite suffering from higher oil prices and rupiah depreciation, as well as the pilot discontent.

“We expect to earn a profit in the third quarter,” Mansury told Reuters.

Garuda and the APG did not comment on whether pilots would be receiving a raise as part of the agreement cancelling the strike.

The International Air Transport Association last month lowered its forecast for industry profits in 2018 by 12 percent due to rising costs of fuel and labor, as well as an upturn in the interest rate cycle.

State-owned Garuda reported a $64.3 million net loss for the January-March period, compared with a revised $101.2 million loss in the same period last year.

The company said earlier this year it expected a modest net profit of $8.9 million for the full year on the back of higher passenger volumes, after reporting a net loss of $216.5 million for 2017.

Garuda aimed to raise 4 trillion rupiah ($278 million) in 2018 by issuing asset-backed securities, Director of Finance and Risk Management Helmi Imam Satriyono told Reuters.

Mandiri Manajemen Investasi has been appointed as the arranger for the securities, which would carry an 8.75-9.5 percent interest rate and have a 5-year maturation date.

Reporting by Cindy Silviana, Writing by Fanny Potkin Editing by Jamie Freed and Gopakumar Warrier

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