JP/Swi Handono

National-flag carrier Garuda Indonesia’s new board members face a Herculean task going forward to not only score profits but also to regain public trust after a string of scandals that hit the airline last year.

The publicly listed company’s extraordinary shareholders meeting on Wednesday appointed Irfan Setiaputra as the new president director, replacing Ari Askhara. Ari was fired in December following the discovery of a smuggled Harley-Davidson motorcycle and upmarket bicycles on board one of Garuda’s brand new airplanes.

Irfan previously served as chief executive officer and president director at a number of telecommunications companies, including Sigfox Indonesia in 2019 and PT Industri Telekomunikasi Indonesia from 2009 to 2012.

“I hope Pak Irfan Setiaputra can do his job well, follow good corporate governance principles and improve Garuda’s performance,” State-Owned Enterprises Minister Erick Thohir said in a statement after the meeting.

Garuda’s stocks, traded on the local bourse with the code GIAA, nosedived more than 3 percent on Wednesday, far more than the slight decline of 0.08 percent on the main gauge, the Jakarta Composite Index.

Erick overhauled the airline’s management following the smuggling case that allegedly involved other high-ranking officials at the company last year. The airline was also under scrutiny over several sexual harassment allegations at the company and the long working hours of cabin crew members, spurring questions over Garuda’s good corporate governance implementation.

Garuda faced flak over various issues last year, including collusion allegations and a public relations tug-of-war with a YouTube content creator over alleged defamation. In June, the Finance Ministry ordered the airline to restate its 2018 financial report after an investigation by the ministry and the Financial Services Authority found that it did not comply with accounting standards. 

On Wednesday, the meeting also appointed former Creative Economy Agency head Triawan Munaf as Garuda’s new president commissioner and pluralism activist Yenny Wahid as an independent commissioner. 

Garuda’s board of directors now consists of president director Irfan, deputy director Dony Oskaria, finance director Fuad Rizal (previously Garuda’s acting director), operations director Tumpal Manumpak Hutapea, human capital director Aryaperwira Adileksana, technical director Rahmat Hanafi, IT and business development director Ade R. Susardi and commerce and cargo director M. Rizal Pahlevi.

Meanwhile, the current lineup of Garuda commissioners comprises president commissioner Triawan Munaf, deputy commissioner Chairal Tanjung, independent commissioners Yenny and Elisa Lumbantoruan and commissioner Peter Gontha.

Triawan told The Jakarta Post on Wednesday that the board of commissioners faced a “tough task” to make Garuda more accountable and trustworthy and to instill high morale in its employees.

“We have to manage debt carefully. We must be more meticulous in every [aircraft] purchase and leasing,” he added. The airline’s boards of directors and commissioners will have a meeting in the near future to discuss the company’s next concrete steps toward improvement.   

Aviation observers are of the view that the new management will need to focus on improving the company’s financial situation.

“There are long-term liabilities that Garuda must bear related to aircraft leasing and aircraft procurement and Garuda needs to find the right strategy to lower its financial burden,” said aviation observer Ziva Narendra.

The company’s financial report showed total liabilities of US$3.5 billion as of September last year, slightly up from about $3.4 billion in the same period in 2018.

Garuda booked $122.8 million in profits during last year’s first nine months as its revenues rose 10 percent year-on-year to $3.54 billion during the period. The company announced last year that it aimed to book $70 million in profits in 2019 after recording a loss of $175 million in its restated 2018 financial report.

Another task on the new management’s desk is how to regain public trust for the airline by improving its services and operations, experts said.

Indonesian Ombudsman official Alvin Lie, who is also an aviation observer, said the new directors needed to boost the sense of unity among employees to ensure efforts toward good corporate governance would be able to move forward.

Indonesian Consumers Foundation chairman Tulus Abadi also called on Garuda to start improving its services to customers. (mfp)

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