Garuda board of directors fired

Garuda board of directors fired

The Jakarta Post, Jakarta

National flag carriers Garuda Indonesia has fired its entire 13-
member board, in a government move to improve the management of
the carrier and its financial performance, a minister said.

The government, which owns Garuda, dismissed six commissioners
and seven directors of the Jakarta-based airline on Tuesday, said
State Minister of State Enterprises Sugiharto.

"I'm reforming the management of Garuda. I would like to
position Garuda as the national flag-carrier rather than being
marginalized," he was quoted as saying by Bloomberg in an
interview in Hong Kong on Wednesday.

This will be the second time in eight years that Garuda has
changed its management team.

"The company has spent the last decade trying to reshape its
finances and generate profit, and it has not managed to do so,"
Sugiharto said.

The report did not mention the new members of the board, but a
source at the Office of State Minister of State Enterprises told
The Jakarta Post that Emirsyah Satar, deputy president director
of Bank Danamon, would replace Indra Setiawan as Pertamina's
president director.

Emirsyah would also hold the finance director position. He
would be supported by two other directors of Garuda's board of
management -- Soenarko Kuntjoro and Agus Priyanto.

Abdul Ghani would be appointed president commissioner, with
Gunarni Soeworo, M. Soeparno, Bambang Wahyudi, Slamet Riyanto and
Aries Mufti as members of the board of commissioners.

Garuda operations director Rudy A. Hardono said the directors
had yet to receive formal notice of their dismissals.

"We have heard about it, but so far we haven't received
letters informing us of the decision," Rudy told the Post in a
telephone interview.

Although the decision seemed not to surprise him, Rudy said
that talks of the board's dismissal was not a major issue within
the company.

"We are ready to be transferred or dismissed anytime. Besides,
we have been on the board of directors long enough," he said,
adding that he had served as Garuda's operations director for the
past four years.

Garuda flies to 30 destinations in Indonesia and serves 24
international routes with a fleet of 67 aircraft. In 2003, it
flew 7.3 million passengers, 50 percent more than in 2002. Of
this total, 5.5 million were domestic passengers. It filled an
average of 69.6 percent of its seats in 2003, higher than the
66.9 percent recorded in 2002.

Garuda's 2004 sales may have risen 20 percent to Rp 10
trillion (US$1.1 billion) over the previous year. It spent an
extra Rp 700 billion last year as fuel prices rose.

Sugiharto said the restructuring would not stop at Garuda.

Another state-owned carrier, PT Merpati Nusantara Airlines,
also needed changes, and this would entail the sale of a stake to
investors, he said.

"At Merpati, I have urged the management to undertake a major
restructuring so as to allow investors to come into the firm,"
Sugiharto said as reported by Bloomberg.

The strategy was to improve governance in state enterprises
and prevent past practices of corruption, collusion and nepotism,
the minister said in his interview.