JAKARTA • Garuda Indonesia has picked former telecommunications executive Irfan Setiaputra as its new president director, after the airline's previous chief executive was fired for allegedly smuggling a classic Harley-Davidson motorcycle on a flight to Jakarta.
At an extraordinary general meeting yesterday, shareholders of Indonesia's flag carrier also decided to keep interim chief executive Fuad Rizal as finance director, and chose Mr Triawan Munaf, a former head of the country's Creative Economy Agency, as chairman.
Mr Setiaputra, 55, joins from telecoms company Sigfox Indonesia, and was previously CEO of state-owned Industri Telekomunikasi Indonesia.
Challenges for the new CEO, who has not worked in the airline industry before, include restoring Garuda's reputation and bringing down high leasing costs: The carrier spends more on aircraft rentals as a percentage of revenue than any of its global peers.
"The appointment of the new CEO for Garuda Indonesia could help remove one of the key uncertainties in the company," said Ms Jessica Pratiwi, an analyst at RHB Securities Indonesia. "Investors and the public are expecting the new leadership to improve corporate governance."
Mr Setiaputra is Garuda's fourth CEO since Mr Emirsyah Satar - who served the company for nearly a decade - stepped down in 2014. Mr Satar was credited with turning the airline around, though he was later arrested for corruption.
Garuda went on to report net losses in three out of the five years, up to and including 2018, with about a quarter of revenue spent on aircraft rental, the highest ratio of any airline in the world, according to data compiled by Bloomberg.
Mr Gusti Ngurah Askhara Danadiputra was fired as CEO last month.
"Keeping those rental costs in check will be a key priority for the new CEO, along with making sure international routes are profitable," said Mirae Asset Sekuritas Indonesia analyst Lee Young Jun. "The company has been trying to renegotiate contracts with aircraft lessors, but that didn't happen fast enough to bring down costs."
The new management will need a sharper focus on fleet utilisation, according to Mr Gerry Soejatman, an aviation analyst and technical adviser at NeoSky Aviasi Digital.
Garuda said it would cancel orders of 49 Boeing 737 Max aircraft, which have been grounded globally since last March, following two deadly crashes - including that of a Lion Air flight that plunged into the Java Sea in 2018. Garuda has not decided how to replace the order, which it booked to succeed its older 737-800 models.
Boeing 737 planes account for more than a third of Garuda's fleet and have an average age of 8.1 years, according to the planespotters.net website. Among other planes, the carrier also operates six Airbus A330-300 aircraft received in 1996 and 1997.
BLOOMBERG
