After Garuda Indonesia Employees Are Offered Early Retirement, Erick Thohir Will 'Retire' Several Commissioner Positions

JAKARTA - The Ministry of State-Owned Enterprises (BUMN) will reduce the members of the Board of Commissioners of PT Garuda Indonesia (Persero) Tbk. This step is an effort to save state-owned airlines from debt bondage.

As is known, Garuda Indonesia's total debt currently reaches Rp. 70 trillion and can continue to grow along with the sluggish aviation business due to the COVID-19 pandemic.

SOE Minister Erick Thohir said that the reduction would be made up to three commissioners. In fact, the shareholders proposed that there be only two commissioners.

Erick said that the steps to reduce commissioners will be carried out as soon as possible. In fact, the target will be carried out within the next two weeks, either through the General Meeting of Shareholders (GMS) scheme or other schemes.

"What is proposed (reducing commissioners) is very good, we must praise it, even I want to propose later if possible only two Garuda commissioners," he said at a press conference at the Ministry of SOEs Building, Jakarta, Wednesday, June 2.

Erick said that reduction measures among the company's top brass also needed to be carried out in line with the early retirement program for Garuda employees. According to him, this step is taken so that there is efficiency in the burden of official salaries and at the same time justice for all workers.

"Not earlier, for example, there was an early retirement but the commissioners were not reduced, we will reduce them later. So I think later the number will be reduced by, for example, two or three people. We will do it as soon as possible," he said.

Previously, the Ministry of State-Owned Enterprises (BUMN) prepared four options in an effort to resolve the problems that entangled Garuda Indonesia airline. The four options are:

First, the government will continue to support Garuda through lending or equity injections. This option has the potential to leave Garuda with a large legacy debt that will create a challenging situation in the future. This option is exercised by both Singapore Airlines and Cathay Pacific.

Second, using bankruptcy protection law in restructuring Garuda Indonesia. With this option, Garuda will use the legal bankruptcy process to restructure obligations such as debt, rent and employment contracts.

Third, restructuring Garuda and establishing a new national airline company. In this option, Garuda is allowed to restructure. At the same time, starting to establish a new domestic airline company that will take over most of Garuda's domestic routes and become the national carrier in the domestic market.

If this option is the choice, further exploration of the option is that Indonesia still has a national flag carrier but this option requires a capital of 1.2 billion US dollars.

Finally, Garuda was liquidated and the private sector was left to fill the void. The government encourages the private sector to improve air services, for example by lowering airport taxes or route subsidies. If this option is used, Indonesia will no longer have a national flag carrier.