Garuda questions government's plan to deal with SIA

Garuda questions government's plan to deal with SIA

JAKARTA (JP): State-owned flag carrier Garuda Indonesia
questioned on Tuesday the government's plan to invite Singapore
Airlines (SIA) to help manage the airline operator.

"We need clarification from the government on the matter. Is
it really necessary to involve Singapore Airlines now? I don't
know," Garuda's vice president of commerce Bachrul Hakim said.

He said the existing management was "quite happy" with its own
appointed advisors, Lufthansa Consulting AG and Deutsche Bank.

"As far we are concerned, Garuda has already made significant
improvements under the direction of our two consultants and we
are happy about it," he told a media briefing on Garuda's plan
for haj transportation in the year 2000.

Garuda, in cooperation with Saudi Airlines, will provide
transportation for no less than 173,459 Indonesians who plan to
go on the pilgrimage during the haj period from February to
April.

Bachrul admitted that President Abdurrahman Wahid had
informally discussed the matter with a Garuda executive, but he
said no follow-up talks had been made since then.

Bachrul declined to say whether Garuda would reject the
government's initiative.

Coordinating Minister for Economy and Finance Kwik Kian Gie
said on Monday the government had held preliminary talks with
Singapore Airlines on the possibility of the airline managing
Garuda or the other state-owned carrier Merpati Nusantara
Airlines.

Kwik said the agreement could also include the possibility of
Singapore Airlines acquiring an equity stake in Garuda or
Merpati.

Bachrul said Garuda had performed better this year thanks to
the advice it received from Lufthansa Consulting AG and Deutsche
Bank, which were appointed in mid-1998 as part of Garuda's
corporate and debt restructuring programs.

Lufthansa Consulting is helping reengineer Garuda's commercial
and operational aspects, while Deutsche Bank is acting as its
financial advisor.

Bachrul said Garuda's on-time performance increased from only
77.6 percent in the first semester 1998 to an average of 88
percent this year, well above the required standard of 85 percent
set by the Association of Asia Pacific Airlines.

Garuda had also seen improvement in its load factor and
revenue per seat per kilometer, Bachrul said.

He said Garuda's load factor only reached 54.4 percent with a
yield of only 3.4 U.S. cents per seat per kilometer in the first
semester of 1998.

"But, in the same period this year, Garuda operated at a
better average load factor of 68.2 percent and enjoyed a higher
yield of 5.1 cents per seat per kilometer," he said.

These signs of improvement have resulted in the turn around of
Garuda's financial condition. The airline earned in the first
semester this year a profit of Rp 507 billion, compared to an
operational loss of Rp 1 trillion recorded in the same period in
1998.

Garuda said that after enduring a net loss since 1990, it
would book a net profit of $34 million out of the predicted $687
million of total operating revenues this year.

Garuda began its debt restructuring program in early 1998,
after sustaining record losses of $46.4 million that year, having
been badly affected by the collapse of the rupiah against the
dollar in mid-1997. (cst)