Garuda to divest from subsidiaries

JAKARTA (JP): National flag carrier Garuda Indonesia plans to divest from all of its subsidiaries in order to focus on its air transportation business, the airline's new boss said here yesterday.

Robby Djohan, Garuda's new president, said the ailing airline was prepared to do anything it had to to lift itself out of its financial troubles.

"Garuda will be a company which provides transportation services and ticket sales only," Robby told journalists after a hearing with the House of Representatives Commission IV for public works, transportation, communications and public housing.

He said subsidiary services such as ground handling and catering would be "better off handled by somebody else".

Robby, appointed president Monday, said some of the subsidiaries were not profiting Garuda and that there was no reason to keep them.

The investment and time spent to manage the firms do not match up with their future prospects, he said.

Garuda has two subsidiaries: the diversified Aerowisata and ticketing system operator Abacus.

Aerowisata has its own subsidiaries: Aerowisata Catering Service, Satriavi Tour and Travel and Mandira Jasa Wahana, a company which provides group transportation services.

Garuda has also established a joint-venture company, Gapura, with state-owned airport operators Angkasa Pura I and Angkasa Pura II to diversify into ground-handling services. The joint venture, however, has not started operating.

Garuda has numerous partnerships with private companies as well.

Robby said he would cleanse Garuda's partnerships from graft to restore the airline's tarnished image.

Last week, over 2,000 employees of the airline staged a protest outside of its headquarter here, demanding then president Soepandi to step down and an end the company's practices of corruption, collusion and nepotism.

The protest led to Soepandi's resignation and a promise to stop cooperation with private companies linked to ex-president Soeharto's family, including cargo handler PT Angkasa Bina Wisesa, PT Bimantara Graha Insurance and PT Ototrans.

Robby said Garuda was not planning to further reduce its fleet. Instead, the airline will restructure both its international and domestic flight routes.

International flights from Asia or America, for example, could stop in Bali as their final destination. Passengers wishing to continue to other cities could then be carried by smaller aircraft, he said.

Garuda currently has 57 aircraft but plans to return six of them to foreign lessors due to declining passenger loads and increasing maintenance costs. (das)