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span class="caption" style="width: 248px;">Erik Meijer: (JP/P.J. Leo)State-owned flag carrier PT Garuda Indonesia (GIAA) has announced that it has acquired shareholders'€™ approval for the appointment of Erik Meijer as its new marketing and sales director, replacing Elisa Lumbantoruan.

The approval was given during the company'€™s annual general shareholders'€™ meeting (AGM) in Jakarta on Friday. Meijer currently serves as director and chief commercial officer of publicly listed PT Indosat (ISAT).

News of Meijer'€™s transfer from Indosat surfaced in mid-April when State-Owned Enterprises Minister Dahlan Iskan said he would implement a change of Garuda'€™s board of directors by bringing in the Dutch citizen.

At first, it was rumored that Meijer would take over Emirsyah Satar'€™s position as the carrier'€™s president director. However, Dahlan dismissed those rumor by confirming that Meijer would be assuming Elisa'€™s post instead.

According to State-Owned Enterprises Ministry secretary Imam S. Putro, Elisa would continue his career in another state-owned enterprise (SOE), while Meijer'€™s transfer was currently pending approval from Indosat'€™s shareholders. Indosat plans to hold its AGM in mid-June.

Emirsyah denied recommending Meijer to Dahlan. '€œI do not know him personally so, how could I have recommended him?'€ he said, adding that everything was decided by Garuda'€™ shareholders.

Separately, Meijer said he had yet to receive official confirmation from Garuda on his appointment. He plans to hold talks with Indosat'€™s board of directors as well as the company'€™s legal team on '€œthe next steps'€. '€œI will speak with the corporate secretary and legal team on Monday,'€ he said.

He admitted, however, that he and Alexander Rusli, Indosat'€™s president director, had held preliminary talks on contingency plans if he was to leave the operator. '€œUntil I have departed and they have found my replacement, Alex [Rusli] will take charge of my position,'€ Meijer said.

Meanwhile, besides approving Meijer'€™s appointment, Garuda'€™s shareholders also approved the company'€™s plan to raise funds for expansion from a rights issue. Garuda, which went public in 2011, plans to release 10 percent maximum of its enlarged shares for the issuance, which is expected to take place in the second half of this year.

Emirsyah said that the firm had not calculated the amount of funds the issuance would generate and that Garuda would hold an extraordinary general shareholders'€™ meeting to discuss the details.

The company'€™s capital expenditure (capex) budget is set at between US$300 million and $400 million, which will mainly be used to buy new aircraft. In addition to the rights issue, capex funds will also be generated from a bonds issuance and bank loans. Garuda will sell debt papers amounting to Rp 2 trillion ($205.74 million) in June and has appointed PT Mandiri Sekuritas and PT Bahana Securities to act as underwriters for the bonds issuance.

This year, Garuda is looking to expand its services by increasing its fleet, opening a new regional hub and adding new international destinations. It plans to purchase 24 new aircraft, bringing its fleet to a total of 139 aircraft by year-end.

It will turn Medan, North Sumatra, into an additional regional hub '€” joining Jakarta, Denpasar and Makassar '€” and it will add London, England; Brisbane, Australia; and Penang, Malaysia, to its list of international destinations.

With its expansion, Garuda estimates that its passenger traffic will rise by 15 percent to 20 percent to 24.48 million to 24.5 million people.

Even though Garuda recorded a strong performance last year, with net profits jumping 72 percent to $110.6 million and revenue surging 12.1 percent to $3.47 billion, it does not plan to pay dividends to its shareholders for the 2012 fiscal year.

According to Garuda'€™s finance director, Handrito Hardjono, the company would not be paying dividends before 2016. Instead, it would continue to use its income to pay off debts and to finance its business expansion.

In 2010, the carrier'€™s total debt amounted to $436 million. It underwent a debt restructuring program in 2012, and paid $7.63 million and $89.08 million in interest and principal payments, respectively. As of December 2012, its debt was $255.25 million.

Following the results of the shareholders'€™ meeting, Garuda'€™s shares closed at Rp 640 apiece on Friday, up 4.9 percent from the previous day.