JAKARTA -- Garuda Indonesia posted a net loss of $2.4 billion in 2020, with its auditor raising concerns over the continuity of the Southeast Asian country's flagship airline.
The net loss is Garuda's biggest since at least 2005, the oldest available data on Quick-Factset, and marks a staggering increase from the $38.9 million loss it reported the previous year.
The figures, posted to the Indonesian Stock Exchange late Friday, further highlight the dire situation the company faces.
Sales were down 68% compared with 2019, while group current liabilities exceed current assets by $3.8 billon, posing a serious problem for Garuda to meet its short-term financial obligations. It also had negative equity of $1.9 billion, meaning total liabilities exceed total assets.
It also had negative cash flow -- spending more money than it made -- of $96.5 million in 2020.
In a further blow, Garuda's auditor PwC assigned a "no opinion" on the financial results -- given when an auditor cannot judge whether a company's accounts have been properly created -- which would further undermine investor confidence in the carrier.
Garuda shares have remained suspended from trading since June 18, after the company defaulted on coupon payments of $500 million on an Islamic bond.
Explaining its decision to give no opinion on the financial report, PwC said in its auditor's report that Garuda's circumstances, not least its problematic finances, "indicate the existence of material uncertainties which may cast significant doubt about the Group's ability to continue as a going concern."
As part of its restructuring efforts, Garuda said in its financial statement that it is undertaking several measures, including negotiating with its creditors for a relaxation on debt payments, rationalization of employee head count and asking the government to disburse remaining rescue funds prepared for the company but yet to be paid.
Garuda had agreed to a rescue package of 8.5 trillion rupiah ($586 million) with the government last year, but failures to meet certain performance requirements has meant that the carrier has only received 1 trillion rupiah.
PwC said that as of Friday, most of the reforms Garuda has outlined have not been achieved.
"The ability of management to realize [the reform measures] is key in supporting management's conclusion that it is appropriate to prepare the Group's consolidated financial statements on a going concern basis," the auditor said.
But as a result of Garuda's failure to carry out the measures, PwC said it was "unable to obtain sufficient appropriate audit evidence to support the assumption that the management's plan is achievable in the necessary time frame to provide a basis for us to issue an audit opinion."
It added: "Should the Group fail to achieve the above mentioned management's plans, it might not be able to continue operating as a going concern."