Garuda Indonesia’s reform-minded leader has been sacked, falling victim to an internal uprising against his cost-cutting efforts.
State-owned Garuda is a money-loser and now ex-CEO Pahala Mansury had begun the painful process of rolling back some of the excesses at the airline. But entrenched interests pushed back against these changes and Mansury was dismissed at Wednesday’s board meeting.
He was replaced by Askara Danadiputr, Garuda’s former director of finance and risk management. Danadiputr currently serves as president of another state-owned entity.
In a news conference announcing the leadership change, Danadiputr stated:
The leadership must face the turbulent economic conditions, starting from the depreciated rupiah to rising oil prices. The main focus of the new management is … an increase in employee happiness. Because making the employees happy will improve customer service.
Umm…
I’ve got a great way to make employees happy: give them all pay raises and promos. But that’s a bit difficult when oil prices are up and the carrier is losing money. Is Garuda’s strategy really going to be to pay employees more, hoping it will attract more customers? Garuda already offers amongst the best service in the industry.
During Mansury’s tenure, Garuda made several painful decisions. Unprofitable routes were cut and expansion frozen. He also tried to cut employee welfare benefits, which certainly turned unions against him. But he cut Garuada’s losses in half during the first half of 2018, compared to a year earlier. That’s not bad for a state-backed flag carrier. Isn’t a cut better than no job at all?
CONCLUSION
Cuts are not always the answer. But Garuda’s precision cuts seemed appropriate in light of mounting losses and climbing oil prices. Ahead of next year’s presidential election in Indonesia, it looks like Garuda workers are safe and the carrier will began to expand unprofitably once again. That’s a shame for the taxpayers subsidizing this experiment.
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image: Aero Icarus / Wikimedia Commons
Perhaps Mr. Mansury can be hired by Air India! The Indians are desperate to unload the money-losing state-owned airline, and he’s already got experience leading one!!
The Indonesian Rupiah is falling like a stone and the re-election prospects of Joko Widodo look bleak. It will be no surprise if Indonesia turns more fundamentalist. In large measure thanks to that effing nutcase whack-job in DC and his absurd trade war.
Garuda will return to its natural position: a discount airline with a strong focus on regional and domestic routes. The days of Skytrax 6 star and dreams of London and NYC are over.
Adil, you may find Emirsyah Satar as a better choice to lead Air India. He was responsible for bringing Garuda back to Europe and 5 star Skytrax.
On the other, spot on regarding the election. State owned company is source of fund for political campaign, direct or indirect. As for employee benefits… well… its Indonesia. Not much power of the Union. Its more like extension of corporate arms or being used for political pressure.