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Finally, Garuda and Pilots Come to Terms

Strike Threat Ends as Pilots and Management Agree on Wages.

(2/15/2003) The threat of a system-wide strike by Garuda Indonesia's pilots against the airline has apparently come to an end.

At a press conference held on Friday, February 14, 2003, the agreed terms of pay increases for the airline's flying employees were announced by Ferdinand Nainggolan, the Deputy for Logistics and Tourism in the Ministry for State-Owned Enterprises. At the press conference, Nainggolan announced that he had been authorized by the Government to order Garuda's management to immediately implement the new pay rates. He also advised that the Government would soon be appointing a consultant, sometime in June or July of this year, to advise the Airline and the Government on a system for future wage structures at Garuda.

New Wage Structures

Under the approved wage structure, cockpit crew wages will increase 35% with pilots, depending on seniority and aircraft, now earning between Rp. 13.4 to Rp. 24 million per month (approximately US$ $1,505 to US$ 2,700). Co-pilots sitting in the right hand seat will earn between Rp. 6.7 to Rp. 11.6 million per month (approximately US$ 750 to US$ 1,300).

The same wage agreement announced at the press conference also provides for a 25% increase in wages for flight crews working in the passenger cabin.

Wage Increase Burdensome for Carrier

In announcing the wage increases, Nainggolan reminded the airline's employees that in current conditions where Garuda is unable to pay a dividend to the Government as its owners, the wage increases represent a real burden to the Company's balance sheet. Garuda continues to hemorrhage financially as it services a restructured US$ 900 million debt burden and is not expected to yield a dividend for at least 10 years to come.

Garuda Indonesia operates 54 aircraft flying to 21 domestic destinations and 25 international destinations. The Company currently employs 8,000 workers.