Garuda to return five more leased jets to cut costs<\/p>\n
JAKARTA (JP): National flag carrier Garuda Indonesia has
\nreceived a commitment from giant aircraft maker Boeing which
\nallows the financially troubled airline to return five leased
\nairplanes, a minister said yesterday<\/p>\n
State Minister of the Empowerment of State Enterprises Tanri
\nAbeng said the deal would reduce Garuda's Boeing armada to 12
\nfrom 17 aircraft, all leased under a long-term contract.<\/p>\n
\"There's a lot of money being saved,\" he said in a seminar on
\nprivatization program. He did not cite specific figures.<\/p>\n
Tanri said the ongoing restructurization at Garuda would
\nprovide the company with a net profit of Rp 500 billion in 1999,
\nfrom a projected loss of Rp 3.25 trillion loss this year.<\/p>\n
\"Efforts are being made to slash leasing costs and renegotiate
\noverseas debts due this year.\"<\/p>\n
Twenty-four of Garuda's 52 aircraft are leased from foreign
\nlessors. The company returned six leased aircraft in June, and
\nreceived approval from Airbus last week to lower the monthly
\nleasing installment to US$750,000 from $1.05 million.<\/p>\n
The sharp depreciation of the rupiah against the U.S. dollar
\nhas multiplied Garuda's dollar-denominated costs, which represent
\n70 percent of total costs, and the country's year-long economic
\ncrisis has sharply cut passenger volume.<\/p>\n
Garuda president Robby Djohan said in June that it would be
\nsufficient for the airline to operate 37 airplanes due to the
\ndifficulties.<\/p>\n
As part of its cost-saving measures, the company has
\ndiscontinued several European routes.<\/p>\n
Robby is also in negotiations to restructure $200 million in
\nforeign debt due this year.<\/p>\n
Tanri said Garuda was on the brink of financial collapse early
\nthis year following a threat from the U.S. and several European
\ncountries to seize its aircraft if it flew to the U.S. without
\nsettling unpaid leasing installments.<\/p>\n
\"In my first working meeting with former president Soeharto, I
\nwas given a document on the likelihood that our flagship carrier
\nwould be grounded at international airports,\" he said.<\/p>\n
Tanri was installed by Soeharto in March, and reappointed by
\nPresident B.J. Habibie in May.<\/p>\n
\"But now Garuda is far from such a likelihood,\" he said,
\nadding that without the prompt implementation of
\nrestructurization the airline might already be out of business.<\/p>\n
He said Garuda was a priority for him because it was strategic
\nto the country.<\/p>\n
\"In addition to the privatization program, my other priority
\nwas to restructure troubled state-owned strategic industries,\" he
\nsaid, citing state-owned electricity company PT PLN and steel
\nmaker PT Krakatau Steel.<\/p>\n
He said the restructuring process started by replacing the
\n\"incapable\" boards of directors of the companies.<\/p>\n
\"After we made the replacement there was a large amount of
\nmoney that we could save at Krakatau Steel,\" he said. He
\ndiscussed economical measures in the procurement of raw
\nmaterials, sales and subsidiaries.<\/p>\n
He added that capable directors would not be replaced but
\ninstead given full support to further increase the value of the
\ncompany.<\/p>\n
State-owned telecommunications provider PT Indosat and port
\noperator PT Pelindo are examples of healthy companies, he said.<\/p>\n
Rumors have circulated that Tanri is planning to replace the
\npresident of toll road operator PT Jasa Marga with a former
\nexecutive at Bakrie & Brothers, in which Tanri was president
\nbefore his ministerial appointment.<\/p>\n
Jasa Marga president Maryadi D. confirmed yesterday he would
\nbe replaced but declined to comment on speculation he opposed
\nTanri's choice of replacement. (rei)<\/p>",
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