Service, efficiency and size key to Garuda privatization<\/p>\n
By Berni K. Moestafa<\/p>\n
JAKARTA (JP): Three more stages comprising better service,
\nefficiency and bigger size await national airline PT Garuda
\nIndonesia ahead of its privatization plans in 2003.<\/p>\n
The airline's spokesman, Pujobroto, said the stages were
\nnecessary to build confidence before Garuda could claim itself
\nfit for privatization.<\/p>\n
\"After we feel we're really ready, in our operation, our
\nsystem, then we'll have the confidence to take on privatization,\"
\nPujobroto told The Jakarta Post last week.<\/p>\n
He said the three stages were part of Garuda's recovery
\nprogram that began in 1998 during the economic crisis.<\/p>\n
\"The year 1998 was for consolidation, 1999 for rehabilitation,
\nthe year 2000 is for service, 2001 for better efficiency and 2002
\nfor expansions,\" he explained.<\/p>\n
He said that while in 1998 the company managed to avert
\nbankruptcy, in 1999 Garuda focused on improving its overall
\noperation performance.<\/p>\n
The steep fall of the rupiah during the crisis caused Garuda's
\ndollar-based debt to soar and its passenger load factor to
\nplunge.<\/p>\n
Before the crisis, Garuda was also known as the cash cow for
\nthe family and cronies of former president Soeharto.<\/p>\n
The subsequent inefficiencies combined with dropping revenue
\nled the company to suffer a negative equity of Rp 1.92 trillion
\n(about US$225 million at the current rate) at the end of 1998.<\/p>\n
In that year, the state airline operator hired German flag
\ncarrier Lufthansa and the Deutsche Bank as consultants, and
\nmanaged to resume normal operation by 1999.<\/p>\n
Pujobroto said Garuda managed to bolster its passenger load
\nfactor to 69.1 percent in 1999 from a 54.4 percent the year
\nbefore.<\/p>\n
Garuda's yield or revenue rose to 5.1 U.S. cents per seat per
\nkilometer in 1999, from 3.4 cents per seat per kilometer in 1998,
\nhe said.<\/p>\n
Garuda is now in its fourth year of the program, which it
\ncalls the year of service and communication.<\/p>\n
\"This year we are revamping our entire service,\" Pujobroto
\nexplained.<\/p>\n
Garuda said the program's goals were to raise service and
\nreliability and improve Garuda's public image.<\/p>\n
The restructuring of services would cover preflight, such as
\ncheck-ins, in-flight and postflight services, such as during
\nbaggage claims, the company said.<\/p>\n
Next year, Garuda plans to kick off its efficiency year.<\/p>\n
\"Efficiency here is not to be mistaken with cost reduction,\"
\nPujobroto said.<\/p>\n
He said the efficiency year would focus on optimizing Garuda's
\nexisting resources to yield better productivity and higher profit
\nmargins.<\/p>\n
\"For instance, what once took people seven days to accomplish
\nwe try to narrow it down to only two days, thus saving us a lot
\nof time,\" he explained.<\/p>\n
Garuda further expects to implement good corporate governance
\nto achieve the program's goals.<\/p>\n
The efficiency program, Garuda said, would cover its
\nadministration, organization, operation, financing and
\npurchasing.<\/p>\n
Expansion<\/p>\n
As for the year 2002, Garuda plans to expand its routes,
\nproducts, services and its fleet.<\/p>\n
Pujobroto said the company would reopen several of its
\ninternational routes that were closed.<\/p>\n
In 1998, he said, Garuda suspended 17 international routes,
\nincluding services to the United States, Taipei, Seoul, Paris,
\nRome, Zurich and Saigon, as part of its retrenchment program
\nduring the crisis.<\/p>\n
This year alone, he said, Garuda planned to add more routes
\nshould the market and the company's resources permit it.<\/p>\n
\"On Oct. 29, we will reopen our Jakarta-Seoul route, which we
\nwill serve three times a week,\" he said, adding that by April
\n2001, Garuda would increase flights to four times a week.<\/p>\n
Pujobroto further said the expansion program also called for
\nGaruda to add more aircraft to its existing fleet of 42 planes.<\/p>\n
Before the crisis, Garuda operated a fleet of 58 planes.<\/p>\n
Albeit still heavily indebted, Garuda has secured a deal to
\nlease seven Boeing 737s from GE Capital Aviation Services (GECAS)
\nand the International Leasing Finance Company (ILFC).<\/p>\n
Coming at a cost of between $200,000 to $250,000 a month, the
\ncompany expects the seven Boeings to replace several old planes
\nand serve new routes.<\/p>\n
Pujobroto said by that year, Garuda hoped to become the leader
\nin the domestic market.<\/p>\n
A strong local market is necessary to support Garuda's
\ninternational service as well as benefit from it, he said.<\/p>\n
\"Inbound passengers who want to continue their flights to
\nother regions in Indonesia can fly Garuda's domestic fleet,\" he
\nexplained.<\/p>\n
However, he added, Garuda did not aim to dominate the local
\nmarket.<\/p>\n
Pujobroto said Garuda's privatization target for 2003 was only
\nthe company's internal target, which was subject to government
\napproval.<\/p>\n
Thus far, the government has yet to announce plans on how it
\nwill divest Garuda and how much it expects in proceeds.<\/p>\n
The government recently assigned independent auditor
\nPricewaterhouseCoopers to audit the national airline as part of
\nits agreement with the International Monetary Fund (IMF).<\/p>\n
Garuda is in the middle of a debt restructuring process after
\nit amassed debts totaling $1.8 billion, of which $610 million is
\nowed to the European Credit Agency (ECA).<\/p>\n
By the end of this year, Garuda expects to finalize a debt
\nrestructuring agreement.<\/p>\n
The state company was in the red for over a decade, and only
\nlast year it returned to the black when it recorded a net profit
\nof Rp 548 billion ($62 million).<\/p>\n
Garuda's finance director Emirsyah Satar said earlier this
\nmonth that he predicted the net profit to reach another Rp 500
\nbillion this year.<\/p>",
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