Garuda's new board has to complete homework

Garuda's new board has to complete homework

JAKARTA (JP): The management board of Garuda Indonesia, the
national flag career which last week acquired three new top
executives, has been told to complete its homework in order to
win additional equity investment from the government.

The board's tasks include financial restructuring and
demonstrating an ability to manage the airline's debts.

Current debts total Rp 900 billion, acquired following
Garuda's procurement of seven Boeing jets several years ago. The
airplanes are part of the 60 aircraft in Garuda's fleet.

Minister of Transportation Haryanto Dhanutirto swore in Achmad
Subianto, who replaced Jazid Adam as director of finance; Sudarso
Kaderi Wiryono as director of commerce, replacing Kussuyono; and
Bambang Wahyudi as director of technique, replacing Soeratman, as
the three new company executives.

In addition to Garuda's president, Soepandi, and the three new
directors, the company's other top executives include director of
operations Dharmadi and director of personnel and general affairs
Eko Suwaryo.

Among the top executives, Dharmadi, 43, is the most senior
leader, beginning his career at the airline in 1973 as a pilot.
He became director of operations in 1994.

Soepandi, 59, started his career at Garuda in 1987. He was
appointed a director in 1993 and as president in 1995. Rear
Marshall Eko, 54, was appointed as a director in 1995 after
retiring from the Air Force.

Of the three outgoing executives, Kussuyono was the most
senior leader at Garuda, beginning his career in 1960. Kussuyono,
who recently celebrated his 56th birthday, was installed as the
airline's commerce director in 1992.

Meanwhile, Jazid Adam, 54, was appointed as director of
finance at Garuda in 1993, after serving as general manager of
finance at PT Semen Cibinong.

Garuda's new directors of commerce, finance and technique are
almost all newcomers.

Achmad, 50, is the exception. Joining the airline in 1989 as
director of finance, he was replaced by Jazid in 1993 upon his
appointment by the government as deputy chairman for financial
affairs at the Agency of Strategic Industries. Achmad replaced
Jazid last week when he was once again sworn in as Garuda's
director of finance.

Kussuyono's predecessor, Sudarso Kaderi Wiryono, 41, was
previously the chief of the administration office for state-owned
firms overseen by the Ministry of Transportation, while Garuda's
director of technique, Bambang Wahyudi, 40, started his career at
the Bandung-based aircraft manufacturer PT IPTN.

The flag carrier began its financial restructuring program
several years ago, when its former president, Wage Mulyono, tried
to acquire additional equity investment from the government.

The government has now approved Garuda's financial
restructuring program and will increase its equity capital to
facilitate its plan to float shares on the capital market later
this year.

Shortly after raising equity in Garuda, the government plans
to sell shares in the airline through a direct placement to
foreign investors, preferably a foreign airline which has
established a good reputation internationally.

Equity participation of a foreign party in the 47-year-old
airline is expected to help improve its financial structure and
management as well.

It is expected that no single party would be interested in
buying Garuda shares if they are offered at present, because its
profits are always questionable. No one knows whether the company
has been profitable in the last two years.

For example, Minister Haryanto reported in a recent hearing
with members of the House of Representatives that Garuda recorded
its highest ever profit of Rp 249.39 billion in 1995, much higher
than the Rp 191.22 billion gained in 1994.

Meanwhile, Garuda has just reported that in the first nine
months of 1995 alone, the air carrier made a profit of Rp 18.8
billion. The large sudden "surge" in profits over the final three
months of 1995 raises questions concerning the board of
director's transparency regarding the airline's financial
earnings.

The airline is expected to make a profit of Rp 154.72 billion
this year. (icn)