JAKARTA -- Garuda Indonesia will end the contracts of at least 700 workers early, the company announced on Tuesday, as the coronavirus pandemic continues to weigh heavily on the struggling carrier.
The move follows similar cuts in June, when Indonesia's flag carrier announced it was letting go of 135 contract pilots, showing that the carrier's woes are far from over as the pandemic ravages the travel sector.
Garuda workers facing the ax this time are those who have been on unpaid leave since May, Garuda CEO Irfan Setiaputra said in a statement. Those affected are believed to run the gamut from ground staffers to pilots and cabin crew.
"This policy was a difficult decision that we had to make ... amid the challenges of the impact of the COVID-19 pandemic," he said. "Beyond our estimates, this pandemic condition has a long-term impact on the company's performance, where the company's condition has not shown significant improvement to date."
The already-struggling carrier had seemed to turn a corner last year, when it reported a modest profit of $6.9 million following two straight years of losses. But the pandemic has plunged it back into the red again, with Garuda reporting a hefty $712 million loss in the first half of this year.
The country has close to 400,000 confirmed cases, the most in Southeast Asia.
The airline, like so many others, is now carrying fewer passengers at higher costs. Seat load factor -- the percentage of available seats occupied by passengers -- fell to 55.5% in the first half of this year, from 70.6% last year, while the cost per available seat kilometer, an often-used measurement of airline costs, is now 7.2 cents, from 6.3 cents last year, despite lower fuel prices.
Facing a cash crunch, it narrowly avoided defaulting on its $500 million worth of Islamic bonds as its creditors agreed to extend the maturity of the debts.
Garuda shares are now trading at 242 rupiah (17 cents) per share, up 60% from the all-time low in March but 60% lower than a year ago.
The company is now in talks with the government over a rescue package, in which Garuda would issue 8.5 trillion rupiah ($580 million) worth of mandatory convertible bonds, to be taken up by an undecided state-owned enterprise. Garuda shareholders will vote on the issuance of the bonds in a shareholders meeting in November.