Garuda's new board faces tough task<\/p>\n
Urip Hudiono, The Jakarta Post, Jakarta<\/p>\n
State Minister of State Enterprises Sugiharto has told the newly
\nappointed board of national flag carrier PT Garuda Indonesia that
\nthey have a daunting task ahead of them.<\/p>\n
\"This change in management was carried out to strengthen
\nGaruda, which the Wall Street Journal daily recently mentioned as
\nthe weakest performing airline in Asia,\" Sugiharto said on Monday
\nafter inaugurating the new board.<\/p>\n
\"I expect the new management to be able to lift Garuda's
\nperformance and transform it into a flag carrier that this nation
\ncan be proud of.\"<\/p>\n
Emirsyah Satar has been appointed Garuda's president director,
\nreplacing Indra Setiawan.<\/p>\n
Sugiharto said the new management's job would not be an easy
\none, as Garuda still had a negative cash flow and total debts
\namounting to some US$845 million.<\/p>\n
The airline had only reached 72 percent of break-even point,
\nwhile its load capacity factor was still below 60 percent and its
\non-time performance remained under the 87 percent standard.<\/p>\n
\"Garuda must avoid defaulting on its debts, as this would
\nsurely affect our overall sovereign debt rating,\" he said.<\/p>\n
Responding to Sugiharto's request, Emirsyah said the new
\nmanagement would try to increase Garuda's net operational revenue
\nof about Rp 500 billion (some $54 million) it managed to achieve
\nlast year.<\/p>\n
Garuda's 2004 total revenue is estimated at about Rp 10
\ntrillion, a 20 percent increase from Rp 8.3 trillion the previous
\nyear. The rise was attributed mostly to a higher passenger load
\nof about eight million, up from about seven million in 2003.<\/p>\n
\"We must work hard to be able to do this so we can pay our
\n(debt-servicing) obligations of some $115 million (a year) until
\n2010,\" said Emirsyah, who as Garuda's finance director from July
\n1999 to May 2003, played a pivotal role in restructuring the
\nairline's massive debts, measured at more than $1.1 billion in
\n2001.<\/p>\n
Emirsyah explained that one way to improve Garuda's financial
\ncondition was by thoroughly evaluating its existing routes and
\nclosing down unprofitable ones. \"It is only after the evaluation
\nand achieving a stable cash flow, that we will look into the
\npossibility of expanding into other potential routes.\"<\/p>\n
The new management would not be tempted into directly
\ncompeting with low-cost carriers, although it would still be
\ninterested in establishing Garuda as a domestic route leader
\nthrough its Citilink service, Emirsyah said.<\/p>\n
\"There is a plan to separate Citilink into a subsidiary,\" he
\nsaid.<\/p>\n
The other new board members are Sunarko Kuntjoro (vice
\npresident for technical affairs and information technology), Agus
\nPriyanto (VP for marketing and sales), Ari Sapari (VP for
\noperations), Arya Respati Suryono (VP for service delivery),
\nAchirina Suryono (VP for general affairs and business support),
\nand Alex Maneklaran (VP for financial affairs).<\/p>\n
Sugharto also appointed former Garuda president director Abdul
\nGhani as the airline's new president commissioner, with Gunarni
\nSoeworo, Bambang Wahyudi, Slamet Riyanto and Aries Mufti serving
\nas members of the board of commissioners.<\/p>",
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