Piloting Garuda through financial turbulence

Rendi A. Witular The Jakarta Post/Jakarta

For Emirsyah Satar, returning to troubled national flag-carrier Garuda Indonesia was like a trip down memory lane when he first worked at the airline as its chief financial officer (CFO) tasked with preventing it from drifting into bankruptcy due to mismanagement.

Inaugurated as the airline's new president director in March, Emirsyah once again faces a daunting task to bring Garuda out of the red following further mismanagement that caused it to suffer Rp 600 billion (US$63.8 million) in losses last year.

His appointment as Garuda's new "pilot" by the Office of the State Minister of State Enterprises is mostly attributable to his long-standing experience in improving the airline's financial performance.

"It's just like the old times over again. Garuda not only faces financial difficulties at present, but also a decline in its performance and image. Much needs to be done here," said Emirsyah in an interview with The Jakarta Post recently.

Apart from making the company's financial reporting transparent to the public and more manageable, his most appreciated contribution while serving as Garuda CFO was his success in helping the airline restructure its massive debts.

Garuda defaulted on some US$1.8 billion in debts to international and local creditors as a consequence of the Asian financial crisis in late 1997. Most of the debts are owed to creditors from the European Credit Agency (ECA).

Along with Garuda former president director Abdulgani, Emirsyah started negotiations with the creditors in mid-1998. Three years later, negotiations concluded, with the creditors agreeing to restructure the airline's debts by extending the repayment period to 2010.

"Creditors should be served, not avoided. At that time, I told them that I was here to help them recover their money. In dealing with creditors we also need to establish mutual confidence in order for the restructuring to run smoothly," he said.

Born in Jakarta on June 28, 1959, Emirsyah spent most of his childhood overseas, as his father served as a diplomat. Emirsyah spent about five years in Prague, the Czech Republic, before returning to Jakarta for four years.

Emirsyah's father was then stationed in Mexico City, Mexico, where Emirsyah spent his junior and senior high school years before enrolling with the Sorbonne university in Paris for two years. He later returned to Jakarta and continued his studies at the economics school at the University of Indonesia, majoring in accounting.

His banking skills and ability to deal with creditors are derived from his long experience as a banker and financial expert in several local and foreign banks and financial institutions.

He started his career as an assistant manager for the financial control division at Citibank Indonesia in 1986. Two years later he was promoted to manager of the corporate banking group at the same bank.

In 1990, Emirsyah served as general manager for the corporate finance division of the Darmadi Group, returning to Citibank in 1994 as vice president for corporate banking until 1996.

Between 1996 and 1998, he was the managing director and chief executive officer of Niaga Finance Ltd. in Hong Kong.

Emirsyah first joined Garuda in 1998 when Robby Johan, Garuda's then president director, asked him to become the airline's CFO to help improve the airline's poor financial records and cash flow.

Although they had not had any direct organizational relationship before, Robby was at a senior level to Emirsyah when both worked at Bank Niaga.

"In 1998, when I was still working in Hong Kong, Pak Robby called me with the job offer. I refused, as I was enjoying myself there; moreover, Garuda was at its lowest ebb due to the financial crisis," he said.

However, only after Robby called Emirsyah for the fourth time did he agree to consider the offer, immediately flying home to Jakarta to meet with his senior personally.

"At first, I was still reluctant to join him. But anyway, I had to hear his plan for Garuda initially in order for me to have some kind of confidence in his rescue efforts. I became convinced later on," he said.

Emirsyah recalled that during the meeting with Robby, he was astonished that the senior banker understood so much about the airline and its detailed financial performance, as well as ways to overcome its problems.

"After hearing (Robby's) presentation and discussing the offer with my wife, I decided to accept since there was still hope for Garuda to fly high again, even though it was such a formidable challenge," said Emirsyah.

However, Robby's tenure at Garuda ended more quickly than expected, in late 1998, after he was appointed by the government to lead Bank Mandiri, a newly established bank formed by merging five state banks that were in financial difficulty.

The government later appointed Abdulgani, former secretary to the state minister of state enterprises, to lead Garuda.

When Abdulgani's tenure ended in May 2002, Emirsyah was the strongest candidate to fill the vacant post, before former state minister of state enterprises Laksamana Sukardi proposed his inexperienced older brother, Samudera, to lead Garuda.

However, following public outcry and protests from Garuda's employees, Laksamana rescinded his decision and appointed Indra Setiawan, another outsider, to lead Garuda instead.

Emirsyah remained with Garuda until 2003, at which time the government decided to appoint him Bank Danamon vice president director, to represent the government's interest in the bank.

The government still had a considerable stake in Danamon after it took over the bank following the Asian financial crisis. The majority stake of the bank is now controlled by a consortium consisting of Temasek Holdings and Deutsche Bank.

"For me," Emirsyah says, "a position is no big deal. The most important thing is that I should enjoy my work. If you cannot enjoy your work you cannot expect to be productive."