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)