Govt rules out SIA support for Garuda

Govt rules out SIA support for Garuda

JAKARTA (JP): Minister of Communications Agum Gumelar ruled
out on Tuesday the possibility of involving Singapore Airlines in
the management of state-owned air carrier Garuda Indonesia.

Speaking to journalists after a meeting with President
Abdurrahman Wahid, Agum said the idea of seeking SIA assistance
to manage Garuda was unworkable because another foreign airline
operator was involved in the job.

"The President has confirmed that the idea cannot be realized
because Garuda has already bonded in a two-year contract with its
existing consultant Lufthansa Consulting AG," he said.

Agum said the existing management consultant had helped bring
some positive results to the country's flag carrier's
performance.

He said Singapore Airlines might be a suitable consultant for
state airline company Merpati Nusantara Airlines to help it focus
its operations on domestic routes.

"It is possible that Singapore Airlines may cooperate with
Merpati," he said without elaborating.

The idea of inviting Singapore Airlines to manage Garuda or
Merpati was initially brought up earlier this month by
Coordinating Minister for Economy and Finance Kwik Kian Gie in a
bid to help the two airlines accelerate their recovery processes.

Kwik said the government had held preliminary talks with
Singapore Airlines on the possibilities of the airline's
involvement in the two local airlines' management.

Kwik also said the agreement could also include the
possibility of Singapore Airlines acquiring an equity stake in
Garuda or Merpati.

Garuda promptly rejected the plan, arguing that it was
satisfied with its current consultants Lufthansa Consulting AG
and Deustche Bank, and did not need an additional consultant.

Garuda said it had performed better in terms of load factors,
revenue per seat per kilometer and on-time performances this
year. The company credited Lufthansa Consulting AG and Deutsche
Bank, which were appointed in mid-1998 as part of Garuda's
corporate and restructuring program of debts totaling US$1.8
billion.

Lufthansa Consulting helps reengineer Garuda's commercial and
operational aspects, while Deutsche Bank acts as a financial
advisor.

Merpati, however, welcomed the initiative, and confirmed that
it was seeking a management consultant and/or strategic partner
to help revitalize its operations and inject fresh funds into the
company.

However, Merpati, which is encumbered by its Rp 1.7 trillion
debts, said it had not been informed of the government's plan.
(cst/prb)