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)