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.
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?
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.
image: Aero Icarus / Wikimedia Commons