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Garuda Indonesia Modest Profit Turns to Substantial Loss After State Audit Agency Review

Following a public relations debacle of unprecedented proportions over how the National Carrier handled an unfavorable blog post, Garuda Indonesia now faces more bad news that, like the first, suggests all may not be well in the Airline’s senior management.

In a miscalculation that is raising eyebrows and suspicions across a wide segment of Indonesia’s private, public, and financial sectors, PT Garuda Indonesia – the State-owned flag carrier has compiled a restatement of its Statement of Accounts for 2018 that have “corrected” a profits report of US$5 million (Rp. 699.9 billion) into a staggering loss of US$175 million (Rp. 2.45 trillion).

According to the published public accounts filed with the Indonesian Stock Exchange and quoted by CNN Indonesia on July 26, 2019, Garuda restated is “other income” from US$278.8 million to just US$38.9 million.

In its restatement of accounts, the National Airline did not undertake a complete revision of its current liabilities except to alter its tax liability from US$14 million to US$46 million.

The change in the stated profitability of Garuda Indonesia has impacted the Company’s equity. While its original  balance sheet show US$910.2 million in total equity, in the revised balance sheet this was adjusted downward to US$730.1 million.

The revised statement of accounts saw the Airline’s total assets stated at US$4.37 billion downgraded to US$4.16 billion and total liabilities also reduced from US$3.46 billion to US$3.43 billion.

The financial restatement was demanded by the National Finance Authority (OJK) when it was determined that the previously filed 2018 accounts from Garuda were problematic. The problems with the Airlines financial reporting came to light when two Commissioners of Garuda Indonesia, Chairul Tanjung and Donny Oskaria, refused to sign off on the 2018 reports. Both objected to a stated source of income of US$239.94 million from Mahata when, in fact, no income was received from Mahata through the end of 2018 via the Garuda subsidiary PT Citilink Indonesia.

In the restatement of accounts, PT Citilink Indonesia stated it had written to Mahata revoking their contract with the company based on recommendations received from the State Audit Board (BPK).

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