Garuda Indonesia Workers' Union Demands Revamp of Management, Board of Directors

Flag carrier Garuda Indonesia's employees union urged the government to revamp the company's management and board of directors, saying they feared the carrier will keep losing money in years to come if no change is forthcoming. (Reuters Photo/Beawiharta)

By : Sarah Yuniarni | on 10:15 AM January 24, 2018
Category : Business, Corporate News, Featured

Jakarta. Flag carrier Garuda Indonesia's employees union urged the government to revamp the company's management and board of directors, saying they feared the carrier will keep losing money in years to come if no change is forthcoming.

The head of the union, Serikat Pekerja Garuda (Sekarga), Ahmad Irfan, told reporters on Tuesday (23/01) they had written a letter to President Joko Widodo outlining their demands, but have yet to receive any response.

"We also want to discuss this with the State-Owned Enterprises Minister next month," said Ahmad, adding that the union is confident the government will be on their side.

Ahmad said the union made the decision to complain to the president directly after Garuda's aircrew and employees repeatedly asked for a meeting with its board of directors but were turned away each time.

The union has been demanding that Garuda reduces the size of its board of directors from nine directors to six.

However, when the carrier appointed a new management team they actually added three new directors to the board.

"Such a waste," Ahmad said.

Ahmad also questioned the directors' ability to end Garuda's financial problems since none of them has any experience in the aviation industry. He did not name the directors.

The carrier reported a $222 million net loss in the first nine months of last year, more than five times the $44 million it lost in the same period in 2016.

Garuda Indonesia president director Pahala Mansury said in September the losses were due to higher fleet costs and increasing fuel expenses.

The union also criticized massive delays of Garuda flights from Denpasar, Bali, on Dec. 2. The poorly handled incident affected both domestic and international flights.

He said the delays were not caused by the Mount Agung eruption, but due to a scheduling mishap stemming from teething problems with its new Sabre online system adopted in August last year.

Garuda's Response

Garuda Indonesia's vice president and corporate secretary Hengki Heriandono said he appreciated the union's effort to help solve the carrier's problems.

"All of our employees are committed and care about the company's future. We will listen to all their demands and suggestions," Hengki said in a statement sent to the Jakarta Globe on Tuesday.

He said safety will always be the carrier's main priority.

According to him, the government can revamp Garuda's board of directors and management at any time as long as it is done according to the law and good governance principles.

Hengki said Garuda has already talked to aircraft manufacturers to delay deliveries of new planes to help the company reduce costs by 25 percent.

The carrier will also maximize the use of its aircraft in profitable routes.

Reuters reported the carrier expects to turn around its financial performance this year, targeting $4.9 billion in revenue, up from an estimated $4 billion last year.

It also forecasts a net profit of $8.9 million in 2018.

The company plans to issue $750 million in global bonds to refinance its debt, and a separate bond issuance totaling Rp 2 trillion ($160 million) to fund business and operational expenses.

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