Garuda to cooperate with Dutch airline

Garuda to cooperate with Dutch airline

JAKARTA (JP): The national flag carrier Garuda Indonesia,
which plans to sell part of its shares to a foreign party through
direct placement, has signed an agreement with Royal Dutch
Airlines KLM of the Netherlands in order to improve its air
services.

Garuda's director for commercial affairs, Kussuyono, said here
Monday that the agreement was signed by Garuda's director for
general affairs Supandi and KLM's president Pieter Bouw in
Amsterdam on Dec. 15 in a ceremony attended by Minister of
Transportation Haryanto Dhanutirto.

Kussuyono said that the air cooperation deal was part of
Garuda's new policy to set up alliances with foreign airliners as
a means of developing and improving its services and management.

"But so far we have not discussed details of the cooperation.
All items of the deal, including the planned stake to be offered,
will be negotiated in our meetings with KLM's executives next
year," Kussuyono was quoted yesterday by Kompas daily.

He said that his company chose KLM for one of its partners due
to their long-standing cooperation with Garuda in serving some of
its European flight routes.

Garuda and KLM have also made a deal to open new non-stop
flights from Surabaya in East Java to Amsterdam.

Networks

Kussuyono said that with the new cooperation, Garuda will be
able to tap KLM's existing flight networks linking Africa and
some European countries. "Garuda even has an option to use flight
networks owned by KLM's alliance, Northwest of the United States,
which serves almost every region in the world, including America,
Australia, Europe and Asia.

The government has officially announced its plan to sell some
of Garuda's stake to foreign investors to help the company
realign both its management and financial structure, thereby
enabling it to offer common shares on the domestic and
international capital markets.

Minister of Finance Mar'ie Muhammad early this month told
members of the Budgetary Commission of the House of
Representatives (DPR) that Garuda's privatization plan, which has
been approved by President Soeharto, will require the investment
of foreign airlines with good reputations.

Mar'ie said that the government will tender the sale of the
stake among prospective foreign investors. He added the
government is also determining the ceiling of the stake to be
offered to foreign parties.

The privatization plan for the 45 year old airline was also a
result of its poor financial performance over the past years. The
Government Audit Agency (BPKP) qualified Garuda's financial
performance as unhealthy last year. Based on its profitability,
liquidity and solvability, the airline was regarded as less
healthy in 1989, 1991 and 1992, but it was very healthy in 1990.
(fhp)