Garuda to lay off 3,000 employees
Garuda to lay off 3,000 employees
JAKARTA (JP): National flag carrier Garuda Indonesia will lay
off at least 3,000 of its nearly 13,000 employees as early as
next month as part of a massive restructuring program, the
airline's president, Robby Djohan, said on Tuesday.
Robby said the dismissals, starting in early October, would be
just one of several moves designed to enable the airline to
survive the deepening crisis.
"We will try to make the rationalization process as easy and
friendly as possible," Robby told reporters on the sidelines of
his visit to the launching of Garuda's new "GA Express" program.
He said the process would be implemented gradually, with some
of the workers being laid off and some possibly moved to Garuda
subsidiaries.
"We will provide a (severance) package of between Rp 38
million (US$3,454) and Rp 98 million per person," he said.
As of last July, Garuda had a total of 12,732 employees,
including 709 pilots, 78 flight engineers, 2,779 cabin crew
members, 3,342 maintenance workers, 3,630 commercial staff
employees and 2,194 administrative workers.
The airline had earlier transferred some 800 employees to
ground-handling company Gapura Angkasa, a joint venture of Garuda
and the state companies Angkasa Pura I and Angkasa Pura II.
Gapura started operations early this year.
Garuda may also opt to move some of its workers to its
maintenance facility unit at Jakarta's Soekarno-Hatta
International Airport.
The $300 million maintenance facility, however, is planned to
be sold as another cost-saving measure.
Robby said last Friday that Garuda's current ratio of
employees to aircraft was 273 to one -- much higher than the
ideal ratio of 167 to each airplane.
Garuda currently operates 50 aircraft.
He said Tuesday the airline needed at least $100 million in
financing to help the company move forward with its restructuring
plans.
"A $100 million loan would be good enough to help us start the
restructuring program," he said.
The funds would be used to buy spare parts for the company's
aircraft, to cover maintenance costs and to pay off the laid-off
workers, he said.
Robby said he was confident that creditors would agree with
Garuda's proposal to roll over between $285 million and $300
million out of the airline's total $400 million in overseas
debts.
"We can regain their trust because we are able to pay the loan
interest now and because of our efforts to repay the debts," he
said.
"They must accept it. After all, they gave us short-term loans
when they knew that the loans would be used for long-term
programs," he said, pointing out that the foreign lenders were
part of the cause of the company's inflated foreign debt
problems.
Robby said Garuda's load factor on domestic flights had begun
to recover and was currently about 70 percent. The company,
however, still suffers about 10 percent to 20 percent losses from
the high dollar-denominated cost of operating its planes, he
added.
International flights have generated a healthier cash flow
than domestic ones because they bring in foreign exchange income
and have a load factor of 80 percent, he said.
He estimated domestic flight revenue would total about Rp 2
trillion this year, amounting to 30 percent of the airline's
total revenue.
The airline also plans to switch to Boeing 737-300 planes from
other aircraft now being used for domestic routes to improve
efficiency and cut costs, he said.
Garuda launched a new program on Monday called the "GA
Express" on its Jakarta-Surabaya route, which provides daily
flights every two hours from 6 a.m. to 8 p.m.
The service, which uses 737-300 aircraft, prioritizes
punctuality and is touted as being more efficient in its
ticketing and reservation system.
Robby said the airline would apply the system to other
destinations, including Denpasar, Bali; Yogyakarta; Medan, North
Sumatra; Menado, North Sulawesi; and Pontianak, West Kalimantan
by the end of the year. (das)