Garuda: From lame duck to IPO
The transformation of Garuda Indonesia from a second rate airline was almost complete, and the carrier could look forward to a successful IPO early next year, the airline’s president and CEO, Emirsyah Satar, told delegates to Aviation Outlook Asia.
Satar, a banker, said Garuda could now go to market confident it had overcome the problems that threatened it just five years ago.
“In 2005 the airline was suffering operational losses, had negative cash flow and a high debt-to-equity ratio,” he said.
“It was a vicious circle. The airline had a bad image that was giving us low yields. And we had an inefficient operation that was giving us high costs.
“Eighty-five percent of our routes were losing money,†Satar said.
The airline, he added, embarked on “an honest and complete analysis of the businessâ€.
“We had to admit to our mistakes. And we had to blame ourselves, not others.â€
Satar said the solution was a five-year plan to re-engineer the company and focus on being a travel service business as well as a transportation business.
“We will not compete on price, instead focusing on service and convenience,” he said.
“And now we base remuneration of our employees on performance and not the years they have spent with the company, as is the case with most government employees in Indonesia.â€
Satar said he expected Garuda’s debt restructuring to be finalised this year in time for an IPO in February 2011.
Ian Jarrett
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