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Garuda Indonesia in Need of a Complete Revamp

Experts Call on Garuda Indonesian to Use Momentum of IPO to Shake Up Management, Improve Efficiency and Upgrade Service.

(1/8/2011) Windijarto, assistant dean of the Economic Faculty of Airlangga University (UNAIR) in Surabaya says that the national air carrier Garuda Indonesia should use its coming initial public offering (IPO) to improve its competitive standing among international airlines. Quoted in Bisnis.com, the financial expert and educator called on the airline to utilize the momentum generated through the financial restructuring of the company to also revamp its management, upgrade efficiency and improve service standards.

Speaking at a seminar in Surabaya entitled "Should Garuda Go Public," Windijato explained: "Competition in the airline industry is currently very intense to the point where a profit margin of around 1.8% from the total investment is already good. In conditions such as these, efficiency must be a top priority for every airline company."

Continuing his analysis, he see the current business environment as offering substantial opportunity for Garuda Indonesia to ride a wave of growth as Asia experiences the highest rates of passenger growth in the world. Poor land transport infrastructures in Indonesia, he feels, provide an added impetus for the growth of any Indonesian domestic airline.

At the same seminar, Adler Haymans Manurung, Director, PT Finansial Bisnis Informasi said that Garuda was still lagging far behind the leading five Asia air carriers: Singapore Airlines, Cathay Pacific, Qantas, Thai Airways, and Malaysian Airlines in a number of areas. He went on, pointing out that in 2011 a number of other Asian and regional airlines will launch IPOs, including Hong Kong Airlines, Grand China Airlines, Air India, Saudi Arabian Airlines, Middle East Airlines and Karthago Airlines.

Manurung continued that in order for Garuda to compete in the modern air market it must go public, although it is obviously late in launching its IPO.

Windijarto told the seminar attended by a number of leading executives from Garuda that measures should be taken to avoid allowing public shares from being acquired or dominated by "certain individuals," ensuring the Airline is owned by members of the Indonesian general public. He urged that the purchase process for Garuda's shares be kept transparent.

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