Govt dismisses Garuda board of directors
Govt dismisses Garuda board of directors
Agencies
Hong Kong/Jakarta
PT Garuda Indonesia, the nation's largest airline, has fired its
entire 13-member board in a government move to improve the
management of the carrier and its financial performance, a
minister has said.
The government, which owns Garuda, fired six commissioners and
seven directors of the Jakarta-based airline on Tuesday, said
State Minister of State Enterprises Sugiharto.
"I'm reforming the management of Garuda. I would like to
position Garuda as the national flag-carrier rather than being
marginalized," he was quoted as saying by Bloomberg in an
interview in Hong Kong on Wednesday.
This will be the second time in eight years that Garuda has
changed its management team, with the latest board changes coming
ahead of plans for an initial share sale. Garuda, set up in 1949
with the help of KLM Royal Dutch Airlines when Indonesia won its
independence from the Netherlands, has targeted becoming a public
company this year.
Garuda, Singapore Airlines Ltd., and Malaysian Airline Systems
Bhd., are facing increased competition from 10 new, low-fare
airlines in Southeast Asia as well as difficulties arising from
soaring fuel prices.
"The company has spent the last decade trying to reshape its
finances and generate profit, and it has not managed to do so,"
Sugiharto said.
Garuda operations director Rudy A. Hardono said the directors
had yet to receive formal notice of their dismissals.
"We have heard about it, but so far we haven't received
letters informing us of the decision," Rudy told The Jakarta Post
in a telephone interview.
Although the decision seemed not to surprise him, Rudy said
that talks of the board's dismissal was not a major issue within
the company.
"We are ready to be transferred or dismissed anytime. Besides,
we have been on the board of directors long enough," he said,
adding that he had served as Garuda's operations director for the
past four years.
However, he was unable to provide details on who would succeed
the current directors and commissioners or when the formal
handover would take place.
Garuda was nationalized in 1954. It now flies to 30 destinations in
Indonesia and serves 24 international routes with a fleet of 67
aircraft, according to its Website.
Garuda's 2004 sales may have risen 20 percent to Rp 10
trillion (US$1.1 billion) over the previous year. It spent an
extra Rp 700 billion last year as fuel prices rose.
Garuda flew 7.3 million passengers in 2003, 50 percent more
than in 2002, according to its latest figures. Of this total, 5.5
million were domestic passengers. It filled an average of 69.6
percent of its seats in 2003, higher than the 66.9 percent
recorded in 2002.
Sugiharto said the restructuring would not stop at Garuda.
Another state-owned carrier, PT Merpati Nusantara Airlines,
also needed changes, and this would entail the sale of a stake to
investors, he said.
"At Merpati, I have urged the management to undertake a major
restructuring so as to allow investors to come into the firm,"
Bloomberg quoted Sugiharto as saying.
The strategy was to improve governance in state enterprises
and prevent past practices of corruption, collusion and nepotism,
the minister said in his interview.