Piloting Garuda through financial turbulence

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."