October 13th, 2009
11:33 PM GMT
Share this on:

Five years ago, Garuda Indonesia was an airline that seemed to be on a path of constant turbulence. It was losing money year after year, battling allegations of corruption within the state-owned enterprise and stained with a questionable safety record. Today, Garuda is a symbol of what's possible in the difficult airline industry. You need a leader with focus.

Emirsyah Satar, 50, is the CEO of Garuda. Now in his fifth year as the head of the national airline, he has turned Garuda from problematic to profitable through staged planning. “In the first two years, just surviving was good enough. And then the next two years was the turnaround stage,” he said. Now the airline is embarking on the growth stage.

The son of an Indonesian diplomat who grew up in Mexico City and Prague, Satar went on to become a banker and then the CEO of Bank Danamon, Indonesia's fifth largest bank. In 2005, he was brought to Garuda as President and CEO and he made drastic changes from the start.

"What happened in 2005, the business model was just not working,” Satar said. It increased accountability at all levels in the organization. And in the short term, Satar decided less was more: “We got out of routes where we were losing money … it was ok if we reduced our market so we could become profitable again."

He positioned Garuda as a “premium airline” and told his staff not to worry about local competition. With a domestic population of 240 million people, he bet focus on the cream of the crop would keep Garuda afloat while it restructured. His bet paid off, in part because Indonesia sidestepped the brunt of the global downturn thanks to the strength of its domestic market: Indonesia's economy is still growing at around 4 percent.

While Garuda is still juggling $700 million in debt, the state-owned enterprise has been able to turn a profit the past two years. Satar has plans to make what he calls a "quantum leap."  By 2014, he wants to bring the fleet from the current 66 to 116 aircraft.

The big challenge now is getting a stalled IPO back on track. Satar had wanted to bring Garuda public this year, but the global downturn put a halt to that. Now he's shooting for an IPO for June 2010. The airline is also in the process of restructuring its debt, which Satar hopes to have completed by the end of this month.

Then there was the issue of safety. In the past decade, a string of crashes involving various Indonesian airlines eroded the public trust in Indonesian air safety. In March 2007, a Garuda plane overshot a runway in Yogyakarta and crashed, killing 21 people. In June 2007, the European Union banned all Indonesian airlines in European airspace. Satar hired an American consultant and and cracked down on safety issues. In July of this year, the EU lifted the ban on certain airlines included Garuda.

The airline now plans to get into the long-haul market, starting with an Indonesia-Amsterdam route by June 2010. That will be followed by routes to Frankfurt, London, Paris, Rome and eventually in 2012, Los Angeles.

"We (Garuda) travel to Australia, Japan, Korea, China and these people still travel. And Bali is still a good attraction," Satar said.

Posted by: ,
Filed under: Air industryAsia

soundoff (6 Responses)
  1. Frederik Londema, The Netherlands

    It will be real progress to see Garuda back at amsterdam Schiphol Airport. Not only thatit will bring bacvk personal memories from the time I worked at Schiphol and saw the Garuda planes land and take off, but also from a very practical point.
    Last year my wife and I made a three week trip to Indonesia and because of the EU rules we had to take an air asia plane from Bandung to Kuala Lumpur and from Kuala Lumpur another fligth to Jakarta, costing us three times as much and almost a day. From now on we can take a direct 2 hour flight.
    Once the direct link between Amsterdam and indonesia will be rerstored we don't need to take a transfer flight in one of the other countries.
    I want to say Good luck to Garuda, it's management and hope to fly you in the not to distant future.
    It also proved that with the right strategy an airline can turn itself around an in his case the Indonesian people should be proud of it's airline.
    Good luck to all hat will fly with you

    October 16, 2009 at 9:37 pm |
  2. Mugunthan

    It's really amazing achievement amidst so called recession or financial downturn., hands off to CEO!!!

    October 22, 2009 at 2:22 pm |
  3. Ella Herlany

    Nice to know we have an excellent CEO heading over a state-owned enterprise and doing a fine job. If only other state-owned enterprise CEO could learn from Mr. Emirsyah Satar.

    October 25, 2009 at 1:34 pm |
  4. kioni

    Kudus,Mr Satar you are role model,to those few who dont take there job seriously,you have insight model which we will bring smile to Indonesian citizen,cause a country wthout national carrier its hard to be recognized .

    November 2, 2009 at 6:05 pm |
  5. Zil Tomatu

    I have travelled (reluctantly) on Garuda flights anmd you can see the cost cutting that had been achieved. No regard to customer service and little regard to safety.
    The Staff are ill trained the food was bad and the safety standards were neglected.
    If an airline can be applauded for not making losses then the full story should be told.
    I dont know who is advising these people but they should be struck off.

    November 17, 2009 at 6:31 am |
  6. arie

    After Indonesia witness such dramatic turn around of Garuda, we read in Forbestraveler.com about Jakarta's airport awarded as the world #2 most punctual airport more punctual than narita, phoenix and Detroit airport. The country with abundant resources and beautiful paradises like Bali, Lombok, Bunaken for divers, and Sumatra not forget to mention Borneo forest will be ready for us to visit.....congratulations Indonesia !

    December 15, 2009 at 1:31 am |

Post a comment


CNN welcomes a lively and courteous discussion as long as you follow the Rules of Conduct set forth in our Terms of Service. Comments are not pre-screened before they post. You agree that anything you post may be used, along with your name and profile picture, in accordance with our Privacy Policy and the license you have granted pursuant to our Terms of Service.

About Business 360

CNN International's business anchors and correspondents get to grips with the issues affecting world business, and they want your questions and feedback.

Powered by WordPress.com VIP