Legislators divided over 'Garuda, Merpati reshuffle'

Fitri Wulandari, The Jakarta Post, Jakarta

Legislators are divided over the government's plan to reshuffle the top management of two state-owned airline companies, Garuda Indonesia and Merpati Nusantara Airlines.

The Office of the State Minister of State Enterprises announced the plan on Monday, arguing that the reshuffle was needed to improve the performance of the two airlines amid turbulence in the industry.

Rosyid Hidayat of the House of Representatives Commission IV for transportation and infrastructure, supported the reshuffle plan, saying that it was the best option to help lift the performance of the two companies.

"Their performance, so far, has not been particularly good. New faces might bring fresh ideas," Rosyid told The Jakarta Post Wednesday.

In 1998, Merpati suffered a loss of Rp 57.4 billion (US$5.52 million), but then made an operating profit of Rp 93.9 billion in 1999. The following year, operating profit was down to Rp 51.2 billion but picked up slightly to Rp 74.2 billion last year.

Merpati director Wahyu Hidayat said that the fall in operating profit was due to rising fuel prices and a weakening rupiah exchange rate against the U.S. dollar. not because of poor management. Local airlines' cost structures are dominated by dollar-based expenses.

Only 35 out of its 60 aircraft of various types ranging from Boeing 737-200s down to Twin Otters are in full operation.

Another legislator, Rully Chairul Azwar, however, opposed the planned reshuffle, saying that the current board of directors of both Merpati and Garuda had managed to improve the performances of the two airlines.

"There have been significant changes within Merpati and Garuda. If the reshuffle is to go ahead, it should proceed by carefully assessing various aspects," Rully said.

He considered that both companies, especially the flagship carrier Garuda, had been on the right track to emerge from their financial problems.

"Garuda has successfully restructured its debt. Now, they are moving on to improve their operations. It is a good sign," he said.

Garuda finalized its debt restructuring last year.

The company's 44 aircraft are all fully operational and serve 21 domestic and 22 international destinations.

Rully admitted that the situation was more difficult with Merpati. However, there was still the chance for improvement, he asserted.