Garuda president Abdul Gani resigns

Debbie A. Lubis, The Jakarta Post, Jakarta

President of flag-carrier Garuda Indonesia Abdul Gani has tendered his resignation amid reports that the government is planning to reshuffle the management of the ailing airline.

Speaking during a hearing with House of Representatives Commission IV for transportation and infrastructure on Monday, Gani said he had submitted his resignation to the Office of the State Minister of State Enterprises last Wednesday.

But he dismissed suggestions that his resignation was due to pressure from the top.

Gani, a former banker, said that he promised three years ago when appointed Garuda president that he would step down once the restructuring of the airline's US$1.4 billion overseas debt had been completed.

Gani's five-year term was due to expire next year.

He expected his resignation would be approved during the airline's extraordinary shareholders meeting at the end of February or early March.

Gani's resignation came when the government was about to reshuffle the top management of Garuda and Merpati Nusantara Airlines, also a state-owned company, in a bid to help improve their business performance.

Meanwhile, House Commission IV member Enggartiasto Lukita said that Abdul Gani had done a great job.

"It is difficult to convince foreign creditors in this climate. Gani is a professional and Garuda still needs a person like him," he said.

He also lambasted the government for leaking news of the reshuffle at Garuda and Merpati to the press, saying that the news had made officials at the two airlines nervous and unable to concentrate on their jobs.

He expected such actions would not be repeated.

An independent audit was conducted between 1995 and 1999 on Garuda, which revealed efficiency losses amounting to US$1.62 billion, $698 million in potential losses and $147 million in lost opportunities for savings or gains.

But Garuda management insisted that the company had taken measures to improve efficiency and minimize losses with the launching of its restructuring program in 1998.

"Since then, we have made advances toward corrective actions and our operations have now improved significantly," he said.

Garuda's corrective measures include the closure of 17 flight routes in 1998, staff cuts in 1998 and the return of uneconomical leased planes in 1999.