Garuda clips its wings to ride out economic crisis

JAKARTA (JP): Crippled by the economic crisis and pressured by its employees, the financially distraught national flag carrier Garuda Indonesia promised yesterday to sever links with companies linked to Soeharto's family and cronies and return leased aircraft to ensure its survival.

Speaking to more than 2,000 employees protesting outside Garuda headquarters on Jl. Medan Merdeka Selatan and demanding total reform of the company, Garuda president Soepandi said he was ready to step down if necessary to facilitate reform.

"Your demands are in line with our current policy; I'm ready to be replaced, and I will soon be replaced," Soepandi told the demonstrating employees.

The employees booed and demanded Soepandi -- a former adjutant to former president Soeharto -- resign on charges of corruption, collusion and nepotism.

Soepandi then rushed into the Garuda building and held a press conference on the 21st floor to explain the company's short-term plans to survive the crisis.

He said he would annul cooperation with private companies linked to Soeharto's family, including cargo handler PT Angkasa Bina Wisesa and PT Bimantara Graha Insurance Brokers and PT Ototrans.

Angkasa Bina Wisesa is allegedly controlled by Soeharto's sister Martini Tubagus Sulaeman, and Bimantara Graha Insurance Brokers is owned by the Bimantara Group, which is controlled by Soeharto's second son Bambang Trihatmodjo.

According to Garuda employees' spokesman Captain Shadrach M. Nababan, Garuda suffered losses of Rp 6 billion (US$500,000) a month in its cooperation with Angkasa Bina Wisesa.

Bimantara Graha Insurance Brokers has allegedly monopolized the insurance of Garuda's airplanes.

Soepandi added that Garuda would also meet the employees' demand to return leased aircraft and only use planes it owned itself to reduce mounting costs due to the weakening rupiah.

"In our survival plan we are trying to return all the aircraft that we have leased. It is still under negotiation, but we only want to operate aircraft that we have already paid for," he said.

Garuda operations director Captain Dharmadi added that the company would return six leased McDonnell Douglas MD-11s on June 15 as part of the restructuring of its fleet from its existing 57 aircraft to 45 by next year.

Under the plan, Garuda will also return six Airbus Industrie A-330s, Dharmadi said.

Subakti, a Garuda pilot who joined yesterday's demonstration, said the return of those planes would phase out all of Garuda's most modern jets and precipitate a brain drain.

"Frankly speaking, it would reduce further Garuda's competitiveness in the international market. But I think it's better to return all those leased planes because their lease prices were all marked up," he said.

Nababan added that the company leased an Airbus at US$11,000 per flying hour but the market price is only US$6,000 to US$8.000 an hour.

Some of the demonstrating employees also questioned Garuda's policy to hand over ground handling in Bali to PT Ototrans, a company with allegedly strong link to Soeharto.

Companies linked to Soeharto's family and associates have come under increasing scrutiny since he resigned on May 21 amid mounting political and economic chaos.

The companies have been accused of trading on their ties to the president to obtain favorable terms in business deals.

Nababan, Subakti and eight of their colleagues met yesterday with State Minister of the Empowerment of State Enterprises Tanri Abeng to present their demands.

"Reforms must be conducted quickly at Garuda, starting with changes in the top management," said Nababan, who has been a Garuda pilot for 26 years.

Tanri said that the government would appoint a new president for Garuda by Monday and said the most promising candidate thus far was banker Robby Johan.

"Robby meets all the criteria; he is professional; he has integrity; he has experience in restructuring companies and he has commitment and dedication," Tanri said.

When asked about Robby, Nababan said he and his friends could see no problem with the government's choice as long as the candidate was not picked based on collusion or nepotism and he had good knowledge about the airline businesses.

Contracts

Tanri warned that state firms should not arbitrarily annul contracts with third parties without consulting the government.

"All contracts which need to be reviewed must be identified and submitted to the government. We will form a team, a task force, to analyze the contracts," Tanri said.

When asked about a move by state electricity firm PT Perusahaan Listrik Negara (PLN) to annul a power-purchase contract with PT Cikarang Listrindo, Tanri said: "That's not correct."

He said such an arbitrary act could give a negative image about Indonesia.

PLN president Djiteng Marsudi said last week that it had notified Cikarang Listrindo, an independent power producer owned by Soeharto's cousin Sudwikatmono, that PLN would stop buying power from it beginning June 15.

Djiteng said yesterday that if he did not take action to review his company's contracts, which were forced on PLN in questionable circumstances stinking of corruption, collusion and nepotism, it would give a bad precedent to future business practices in the country.

"And this would worsen our image in international forums," Djiteng said.

About 200 demonstrators, including students, activists and retired PLN workers, who billed themselves as a Committee for PLN Reform, went to the Ministry of Mines and Energy and PLN headquarters, to give support to Djiteng's move. (jun/jsk/rid)